Non-profits are one of the few types of organisations that seem to eschew the use of proper accounting software to manage their books! As NFPs are often volunteer-based, and government or member-funded, they can be extremely prudent with money. But that doesn’t mean one needs to cultivate an ad hoc approach to bookkeeping…
While shoebox or Excel-based accounting still runs rife in this sector, with 2023’s powerful accounting solutions on the market (which are more affordable than ever) there are no excuses left.
So if you’re an NFP, why should you emerge from the last century and embrace the far-reaching benefits of accounting software to manage your financial operations?
1) Tracking donations and funds
Donations and fund-raising activity dominate the financial landscape of the non-profit sector. Being able to properly manage and report on donations and other funding sources sits at the heart of sound NFP business administration.
From membership fees to donations, fundraising, grants, tax concessions, and pledges, there are considerable financial implications to running an NFP. Accounting software can be set up to deftly manage and report upon these funds for both internal management and external compliance.
2) Consistency in accounting and bookkeeping practices
Being consistent in your approach to accounting and bookkeeping is vital for transparency, accuracy, and simplicity.
This is especially true for NFPs who have multiple branches, offices, or groups. Take Scouts SA (who happen to be avid Reckon users), for example.
Now, by rolling out affordable accounting systems across all branches, they’re all on the same page.
“The challenges became obvious when financial information was supplied in various formats – commercial accounting packages that had been purloined from home businesses, (and not necessarily transferrable at a later stage), Excel spreadsheets of varying states of expertise, beautifully presented folders with monthly dividers and copies of invoices and bank statements—right down to shoeboxes stuffed with screwed up bits of paper.”
3) Easily migrate data to a better platform
If you’re an NFP and have been using something like Excel for your bookkeeping, you may be stuck in stasis, and perhaps worried or bothered by the idea of migrating all of your previous data. Luckily most modern accounting apps can easily import your previous financial records and data.
4) Transparency of operations
While many business models require transparency, particularly larger companies, NFPs require this with more weight than most.
When you handle donations and public funds while performing a service for the community rather than a profit-generating venture having transparent finances and taxes responsibilities is paramount.
Furthermore, with a higher level of volunteerism, part-time interaction, and revolving roles like treasurers, transparency takes on new importance. In other words, you need to have a system of accounting, bookkeeping, and reporting that can be operated by multiple people with ease. (If you’re reliant on disparate or paper-based systems that lend themselves to oversight this can be extremely difficult.)
5) Simple and accurate government compliance
All businesses need to be accountable to government departments in various ways. Much of this accountability centres on ATO compliance. So, the ability to swiftly and accurately file taxes, apply for concessions, and submit BAS is a serious time saver.
Like most companies, many NFPs will need to deal with:
- funding, gifts, and grants
- volunteers vs employees.
When it comes to government compliance, submitting your financial details straight from your software will save time and headaches
How can accounting software support NFPs?
Let’s do a quick overview of what NFPs can do with accounting software to help manage their operations: