By Jacqueline M. Tiso, President and Founder of JMT Consulting Group

It's the ultimate in convenience, or so it seems at first. Buying commercial accounting software can seem like the perfect solution since it is used by so many for profit organizations. However, numerous nonprofits find themselves in need of features that commercial software cannot offer. Because nonprofits can have extremely specific accounting and reporting needs they oftentimes move beyond their ability to efficiently use commercial products. When that happens a move to a fund accounting software solution is necessary.

How do you know when to make the switch? If you use commercial software when should you upgrade to fund accounting software? Should you buy fund accounting software right from the start? Let's look at three aspects of software: differences, function and training. This comparison should give you a clear idea of what to use and why.

The primary differences between commercial software and fund accounting software are the types of tracking and reporting they offer. Nonprofits are responsible for more types of reporting than commercial businesses are. Therefore features such as tracking of restricted funds and their use, or separating and tracking funds for grants are not offered in commercial software packages. Additionally, you may need the ability to track incoming monies across different time periods, easily produce reports that comply with both the Financial and Governmental Accounting Boards (FASB), and generate additional reports that verify the application and use of restricted contributions and grants. Attempting to use a commercial program to separate, track and report on donations, grants and other contributions is like forcing a square peg into a round hole.

The biggest question to consider is "Will this software perform the tasks we need it
to perform?" Look for tale-tale signs to decide if your commercial product is lacking in features.

For instance:

Is your staff repeatedly spending excessive amounts of time to produce reports or financial statements?

Is it difficult to maintain budgets, track restrictions for contributions or reconcile balances?

Is a lack of security an issue?

Do you have grants for which you need to track and report expenses?

Do you need to track and account for your fundraising activities?

Do you or your staff members constantly make the statement, "I wish this software would??" If so, chances are you have outgrown the functionality of commercial products.

< Prev		Next >