Mystery Solved: Finding the Best Nonprofit Accounting Software
Searching for accounting software for your nonprofit organization can be a tricky process if you’re not sure what to look for. Oftentimes, nonprofits end up using multiple products with different features to meet the unique needs of their organizations, but you shouldn’t have to piece together various software platforms to get what you need and hope everything magically works together. It is possible to find everything you need in one software. We have gathered the evidence and solved the mystery so you can make an informed 
1. It’s Created for Nonprofits
2. It Has Built-In Fund Accounting
3. It’s a Cloud-Based Software
4. It Includes Donation and Donor Management
5. It’s User Friendly
6. It Offers Knowledgeable, Friendly Support
Summary
1. It’s Created for Nonprofits
When looking for the best nonprofit accounting software for your organization, you’ll want to make sure the software was created for nonprofits. This may sound obvious, and yet many nonprofits still attempt to use accounting software that was created for businesses.
Nonprofits need to show transparency for all their donations, other monetary support, and expenses. Why would you try to show transparency with business software that merely accounts for profits and losses to determine their bottom line? You wouldn’t try to write whole documents in Excel or try to use complex math formulas in Word. Could you? Maybe. But why waste your time, money, and effort on complicated workarounds in the wrong software? Aplos Software was created for nonprofits by former nonprofit leaders. They know the ins and outs of nonprofit accounting because they have been there.
Businesses are focused on profit, keeping their expenses lower than their income. Nonprofits need to be able to focus on their missions, while showing accountability for the funding they receive. They inherently have different software needs than businesses do. They need to pull accurate and transparent reports that are specific to nonprofit organizations. Businesses are able to deposit money in the bank and use it for whatever expenses they need, so they only need to look at the overall balance to know where they stand financially. But nonprofits are held accountable for how they use the money they receive—which is why they need fund accounting.
2. It Has Built-In Fund Accounting
Any legitimate nonprofit accounting software, such as Aplos, will have built-in fund accounting. Nonprofits need to keep track of every dollar they receive and how they use it, which is why fund accounting is imperative. Not only do you need to keep your expenses lower than your income, you also need to demonstrate stewardship of everything you receive, and easily show your board, donors, and the public how you’re spending your money. If someone donates $100 to your building fund, for example, you need to make sure that money is used for that purpose. Fund accounting helps you track every dollar that comes in, goes out, and moves through your organization.
A true fund accounting software should also make it easy for you to pull all the reports you need. Think of reports as answers to questions someone might ask about your organization. Where do your overall finances stand at any point? What are your balances for each fund? Are there any patterns over the last year as you look at your income and expenses? How do your actual finances compare to the budget you created at the beginning of your fiscal year? To answer any of these questions, you would generate reports, such as your Balance Sheet, Balance Sheet by Fund, Income Statement, and Budget to Actual. Rather than wasting time trying to collect the data from various spreadsheets, the ideal software can help you pull all that data together quickly, efficiently, and accurately.
You’ll also want to check that the software includes other accounting features, such as bank reconciliation, Accounts Payable, Accounts Receivable, and fixed asset management. If you can also file your Form 990-N or 990-EZ directly from the platform, that’s a huge bonus.
3. It’s a Cloud-Based Software
Desktop software limits the ability of your staff and volunteers to collaborate and work on multiple tasks at the same time from different devices. With cloud-based software, you can access it from anywhere, which means you can work from anywhere. As long as your team has internet access, they can contribute to the organization and update information in real-time.
Not only is having multiple users necessary for efficiency in many cases, having multiple users in the software is a good internal control as well. Since nonprofits rely on transparency of their finances, multiple users can help them be accountable for how the data is entered in the software so everything will remain aboveboard. You’ll want to look for software with multiple user roles so you can give certain staff members and volunteers only the permissions they need to do their jobs.
You also don’t want to rely on your own server to store your data. Too many things can go wrong in that scenario, including hardware crashes, theft, floods, or fire that may result in the loss of your nonprofit’s important data. The ideal cloud-based software will safely and securely back up your data so you won’t lose any information you enter in the system.
4. It Includes Donation and Donor Management
No one wants to waste time with data entry, especially in a software that requires you to enter the same data in multiple places. In the ideal nonprofit accounting software, donations will be tracked by donor for contribution statements, and donations will be tracked in your accounting—without entering anything twice. Having software with some built-in automation will improve your efficiency and accuracy, allowing you to control your overhead expenses.
The best accounting software for nonprofits won’t solely be for accounting. It will also feature donor management and a CRM (Constituent Relationship Management system). Having everything you need in one place will save you time so you can focus on what matters most: your mission. Managing your finances, donations, and donors should be simple, and it should take very little time to generate and send contribution statements to your donors or set up an email marketing campaign. The right software can handle all the heavy lifting for you.
It should be easy for people to donate to your nonprofit. When people are compelled by an organization’s cause, and the process to give is easy, they are likely to donate. Don’t let cumbersome or outdated donation tools get in the way of people’s willingness to give. Good software will include digital donation tools, such as giving forms that your organization can share in emails or on social media, mobile giving options, and donation widgets you can put directly on your website. It will also provide automated donation receipts with each gift so you’ll never forget to provide one to a donor.
Tools with recurring giving options will also help your organization better manage your finances because your income projections will be more accurate. Software that offers a secure donor portal where people can log in and manage their own donations will save you time and make the donor happy. A good software may also offer additional features, such as Text to Give, so people can give directly from their mobile phones.
5. It’s User Friendly
A nonprofit accounting software needs to be robust enough to handle everything you need it to do, but you shouldn’t need to be an accountant to understand how to use it. The best nonprofit accounting software will be user friendly for everyone who comes in contact with it. The user interface should be intuitive for you, your staff, your volunteers, and your supporters. From someone who donates to your organization to someone who enters transactions and generates reports, it should always be easy to navigate. It also helps if the software is built for any size organization, so you won’t need to switch platforms as your nonprofit grows.
6. It Offers Knowledgeable, Friendly Support
Starting out in a new software shouldn’t take forever. There is a learning curve to anything new, but switching software doesn’t need to be cumbersome or overwhelming. When the platform includes a proven setup process and a knowledgeable support team, users can start using the software the same day. Some software platforms, like Aplos, also provide a training center of resources for using the software, as well as free articles and webinars so you can continue your education on fund accounting, fundraising, donor management, and more.
When you do encounter an issue or are unsure about how to use a feature, knowledgeable, friendly, and free customer support is essential. Have you ever avoided asking a question or done hours and hours of research to try to answer it yourself just because you didn’t want to pay for support? That’s not helpful at all. Customer support from experts who care about you and your organization can make all the difference when choosing the right nonprofit accounting software.
One final feature you should look for when searching for a nonprofit accounting software is the ability to try it out before purchasing anything. You can check off all the boxes on paper, but until you actually test the software, you’ll never know for sure if it’s the right fit for your organization. Aplos offers nonprofits a 15-day free trial so you can tinker around inside the software and evaluate it for your needs. That way, when you do choose it, you’ll know you made the right decision.