Best Accounting Software for Nonprofits

Accounting is a critical but underappreciated part of a nonprofit’s operations. From running payroll to reimbursing travel expenses in a timely manner to allocating contributions to the right programs, the right accounting system can simplify some of your most important and labor-intensive processes and provide your auditor with critical data. We reviewed some of the most popular accounting systems to help you make the best decision.

Though the cost of accounting software can vary significantly, most are quite reasonable, particularly considering the time savings they can create for your team. Many of the most popular accounting software providers offer a free option or at least a free trial and all of the software we reviewed had a basic package for less than $20 per month.

However, these basic packages generally allow a limited number of users and don’t include all of the functionality. If multiple members of your team need to be using it or if you want elevated functionality, be ready to pay for a higher-tier option.

Before you sign a contract, talk to a representative from the company. They may be able to throw in additional functionality as a bonus or give you a price break based on prepaying for a full year or other possible discounts.

The right accounting software can do a lot for your nonprofit if you take advantage of all the features:

• Revenue and expense tracking: Accounting software keeps all your revenues and expenses in one place.
• Reporting: Reports from your accounting software can give you a bird’s-eye view of where you stand against your organizational budget, your project or department’s budgets and grant spend down.
• Integrations: Software you use for credit card processing software, invoices, expense reports and more can be integrated seamlessly with accounting software.
• Invoicing: If, for example, you bill government providers upon delivery of service or after hitting key milestones, accounting software can automatically generate these invoices.
• Mobile application: Many types of accounting software include a free or low-cost app that allows staff to input expenses and revenues from their phone or tablet.
• 1099 forms: If you hire contractors, many types of accounting software can generate and send their 1099 forms.
• User roles and permissions: If different members of your team are interacting with your accounting software in a variety of ways, setting up different roles and permissions can restrict access to only what a given employee needs while keeping confidential information private.

Selecting accounting software can be a daunting task. Here’s how to get it right.

1. Know your needs.

Do you just need new software or do you need to hire a certified public accountant? Do you need an accountant or a bookkeeper? Do you have adequate accounting staff or do you want to pick a software company that also offers staffing? Before you can compare software, talk to your finance team, analyze your existing capacity and get a clear picture of what you need.

2. Make sure you understand the language.

As you look for accounting software, you may encounter technical terms that seem over your head. While you don’t need to become a tech head to make this decision, there is some key technical language and some key accounting terms that you’ll need to know.

3. Evaluate your other systems.

One of the biggest ways that accounting software can save you time is by integrating with your other systems, such as your customer relationship management, your credit card processing software and your employee reimbursement system. Have a list of all these systems and an assessment of whether you’re considering changing any of them so that you can select accounting software that integrates with them.

4. Consider the options.

With a comprehensive understanding of your needs, use a guide like this one to consider the various options and select the best choice for you. Although it can be tempting to select software on price alone or based on the latest tech trends, remember that even modest gains in staff productivity will render price differences all but moot quickly and that transitioning again if you make the wrong decision can be expensive and time-consuming.

5. Select your software and customize it.

Once you subscribe to your software, make the most of it. Today’s accounting software is designed to be fully customizable, so make sure you have it set up properly based on whether you’re using cash or accrual accounting, if you’re using it to send invoices or for whatever other needs you have.

Accounting software can simplify payroll, make it easier to track your invoices and make tax and audit seasons less stressful:

• Centralize your accounting: Getting all your revenues and expenses into a single system makes it quick and easy to track progress against budgets and to provide auditors with the necessary information.
• Automate workflows: If you set up automated processes for recurring actions, you can eliminate busy work, reduce human error and empower financial staff to focus on higher-level strategy and decision-making.
• Empower staff: Staff often become frustrated with finance department staff if, for example, their reimbursements take too long or they can’t access real-time data of where they are against their budgets. Accounting software can empower staff to perform functions or access data directly, rather than adding one more item to the finance team’s to-do list.
• Simplify audits and taxes: Tax and audit season can be major sources of anxiety for even the most organized nonprofits. Accounting software can reduce stress and simplify the process of gathering and sharing needed information.