There is a constant cash flow in the nonprofit sector. A report by Nonprofits Source says that only Americans donated $471.44 billion to numerous charities in 2020. The figure is 5.1% more than the preceding year. Since nonprofits deal with monetary transactions, they must also abide by financial standards, or they might lose their tax-exempt status. Continue reading to learn more about this and which nonprofit accounting software is there to make your task easier.
What Is Nonprofit Accounting Software?
Any tool that helps you manage accounting tasks for a nonprofit organization is known as accounting software for nonprofits. However, there is a fine line between accounting for for-profit and nonprofit organizations. Business accounting is mainly tracking profit and loss. It follows how much the for-profit organization spends, earns, saves, or loses. On the contrary, nonprofit accounting is all about fund accounting. The tool needs to monitor the fund’s flows. For example, where the money is coming from and where it is going. Also, the tool processes all incoming donations and keeps the donors and board members updated on how the organization uses donations.
Why Does a Nonprofit Organization Need an Accounting Software?
A nonprofit organization requires the right accounting tool to keep their nonprofit, tax-exempt, and tax claim back statuses active. To keep these statuses intact, all nonprofit organizations must process some accounting tasks. Find below some common reasons for you to own accounting software for nonprofit:
The financial accounting standards are stringent for nonprofits. You need a nonprofit accounting tool to meet such standards as FAS 116 or FAS 117.Buddying charitable organizations have few volunteers and staff. Hence, you need an automatic tool that is easy to learn. So that you can process the accounting needs and save money.Such devices also help you with additional accounting tasks like tracking grants, meeting reporting requirements, producing balance sheet reports, updating donors on donation utilization, and more.Such tools format accounting reports for the Return of Organization Exempt from Income Tax or Form 990.
The Benefits of Nonprofit Accounting Software
Whether you are a global nonprofit organization or a hyperlocal charitable entity, you need a sophisticated accounting tool to carry out nonprofit accounting for the following benefits:
Your charity can accept donations online or offline in a transparent way.Become eligible for large donations or grant requirements by reporting and planning using such tools.Transparently reports the inflow and outflow of money to the stakeholders, donors, and board members.Most nonprofit accounting tools are cloud-based web apps. You do not need to set up costly IT infrastructure to install standalone apps.Some accounting software will also help you to prepare to reclaim tax return filling and comply with HMRC and IRS requirements. You can automate various recurring tasks and reduce human error.You get many accounting features in one centralized software. These features include transaction importing, donation portal, payment receipts, bank reconciliation, budgeting, check printing, pledge tracking, etc.
So far, you have thoroughly discussed nonprofit accounting software, its utility, and its benefits. Find below the trending, easy-to-use, and reliable nonprofit software for accounting:
Wave Accounting
Wave Accounting is the right nonprofit accounting software if you are a small or growing charitable foundation. You can become your accountant and save donation money on additional staff. Also, the tool is straightforward and works online on popular web browsers. From invoicing to payroll, everything is one intuitive web application. Some of its salient features are:
Quit chasing payments from granting foundations or donors with online invoicing.Your donors can pay your charity effortlessly and securely through its online payment panel.The payment console accepts debit cards, credit cards, Apple Pay, and direct bank transfers.Track donations and their utilization in a painless way.Its accounting module prepares the tax reports in the correct format for various tax returns.Its Banking module links the bank account with the accounting books for easy reconciliations.
The tool offers free Invoicing, Accounting, and Banking services. You need to pay a nominal fee for Payroll and Payments.
MoneyMinder
MoneyMinder is simple accounting software with just the features and functionalities to operate a charitable agency swiftly. Volunteers with no prior bookkeeping experience can also use the tool so that you can save money on accountants and bookkeepers. Furthermore, this tool comes without complicated treasurer software functions to facilitate easy usage. Its notable features that you should know are:
A Bookkeeping module to manage banking registers, transactions, reconciliations, reports, and transfers.Track fundraising, reimbursements, and payments, and quickly email them to the stakeholders.Create a budget or forecast expenditure based on your charitable activities and categories.A Document Library module stores receipts, forms, records, other documents, and tax filing templatesPrepare annual reports, perform audits, and calculate 990EZ totals.
The software comes with a Free subscription for basic tasks like donor tracking, group management, and calendaring. You can get a Pro subscription if you want a complete suit for your nonprofit agency.
Zoho Books
Zoho Books is well-rounded nonprofit accounting software for nonprofit agencies of any size. Be it a new charitable foundation or a nonprofit with global operations, there are scalable features and pricing models to fit the needs of every agency devoted to a good cause. You or your volunteers can easily set up a nonprofit organization quickly. Rarely will you need a dedicated bookkeeper or accounting expert? The tool helps you along the way by offering the functionalities on a clutter-free user interface (UI). Furthermore, there is a free support team whenever you are stuck on something and need a quick resolution. Zoho books make fund accounting effortless and intuitive. You can focus on grants, donations, and events while the application swiftly manages all the inflow of donation funds and categorize them.
Aplos
Yet another robust tool for nonprofit accounting is Aplos. Over 40,000 charitable foundations use this tool to stay afloat as a nonprofit organizations and keep their tax-exempt status undamaged. Find below the highlighted features of this nonprofit accounting web suit:
True fund accountingFlexible chart of accountsMonitoring incomes, grants, and donationsBudget charitable activities by tags or fundsCreate personalized financial reports for departments, campaigns, and projectsACH file exportExpense and income allocationsFixed asset trackingForm 990 reports
Apart from a total accounting solution online via a web browser or mobile, Aplos is also renowned for nonprofit bookkeeping services. You can request on-demand services when you need to process challenging accounts or tax returns. Its bookkeeping team offers you accurate records, better financial statements, and simplified solutions. Aplos offers three different subscription packages with 15 days trial period. These packages are Aplos Lite, Aplos Core+, Aplos Core & Advanced Accounting.
Accounting Seed
Accounting Seed is yet another comprehensive nonprofit accounting software that helps charitable organizations to manage many layers of nonprofit tasks and campaigns. The tool has been tailored particularly for nonprofit needs and is easy to operate. You can even train your volunteers to use the tool if you need to save money on additional staff hiring. Key tool highlights are:
Manage fund accounting in multiple currenciesManage multiple fundraising campaigns, grants, and donorsOperate from multiple locationsManage more than one charitable agency in one centralized toolNo-code reportingFast month and year closingsSalesforce nonprofit success pack (NPSP)
You and your team get a full grip and oversight over the financial management lifecycle of your charitable agency. Furthermore, some functionalities enable you to view financial statements, donation reports, and tax filling in real-time. Thus, you can quickly deal with donors and granting authorities and secure more donations for your charitable cause.
Akaunting
Akaunting is a popular accounting tool for freelancers and small businesses. As a small nonprofit agency, you can try out this nonprofit accounting software if you are looking to cut costs and yet comply with stringent charitable foundation policies. Key features that your charitable agency can use are:
Dashboard for all accountsBanking services and reconciliationsCustom reports for tax fillings like Form 990Categorize transactionsExpense tracking
Its free subscription gives you access to 1 user profile and one accountant profile. Furthermore, you get a free billing calendar, community support, and live currency rates. However, if you want to allocate funds for nonprofit accounting, you can get the Premium Cloud plan with unlimited accounts and all the features of Akaunting software.
Final Words
Nonprofit accounting software is beneficial for your nonprofit organization to manage resources. Such tools also help you file proper tax returns to keep your organization’s nonprofit status intact. Use any of the above accounting tools for your nonprofit organization and comply with local and international laws for nonprofit entities. You may also be interested in Zoho Payroll for processing nonprofit or for-profit organizations’ payrolls.
