I first posted this article two and one-half years ago and received many positive responses from our followers. In view of the recent change in corporate ownership from Sage to Abila and product re-branding, I thought it would be a good time to update the information. So let’s again talk about why a nonprofit or governmental organization should seriously consider implementing specialized fund accounting software. Actually not too much has changed. The product continues to be enhanced, there are options on how it is deployed (in-house or the cloud) and paid for (perpetual license or subscription). Otherwise, the basic reasons for choosing a specialized accounting software solution remain the same.
At some point in an organization’s life cycle, accounting and reporting become more demanding. Often this realization concurs with the transition from single-tier, founder management to a two-tier team management with functional specialists (e.g., adding a financial professional). So, what are the main reasons for investing in specialized nonprofit accounting software? Let me suggest a few:
- More accounting objects in various combinations to track (programs, projects, multiple revenue sources, departments, locations, etc)
- Restrictions on contributed funds
- Nonprofit GAAP reporting compliance (FASB 116/117 and GASB 34)
- Budgeting and control considerations
- Stakeholders require more and better reports
- Need for indirect cost allocation to programs and grants
- Internal control considerations
- Outside influence from auditors and funders
Entry-level accounting systems such as QuickBooks go only so far in meeting growth and complexity-fueled requirements. They require more and more error-prone manual, off-the-books record keeping and reporting. Converting to a commercial accounting-based ERP system, such as MS Dynamics or Sage ERP 100 (formerly MAS 90), will satisfy some of the requirements, but still fails to handle restricted fund accounting and nonprofit GAAP reporting without resorting to third-party report writers and creative workarounds
In contrast, Abila MIP Fund Accounting is a permanent solution that can be scaled to organizational growth. It not only satisfies the demand of greater volume and complexity, but it is designed to meet all the nonprofit-specific requirements. For example, revenues are tagged as to their restricted nature upon transaction entry and automatically display in the FASB 117-compliant statements of activities and financial position. Areas of special financial interest can be segregated into self-balancing funds where required by regulation or best practices.
In contrast to most commercial and competitive nonprofit accounting systems, MIP Fund Accounting employs a segmented account structure, providing unlimited flexibility in classifying financial transactions. A built-in proprietary report writer with more than 100 reporting templates capitalizes on the segmented account structure and enables user-based tailoring to generate the full spectrum of financial reports to stakeholders. Abila Fund Accounting is consistently the recommendation of accountants and independent reviewers, and clearly the nonprofit sector leader.
NFP Partners provides Abila MIP Fund Accounting for in-house implementation or for remote hosting. For smaller organizations that need its capabilities, the software is offered at a special starter price, and NFP Partners can provide optional accounting services to supplement internal resources.