Today I want to share with you a comparison of two of my favorite nonprofit softwares, and the reasons why sometimes one is not enough. Most of the clients that I’ve talked to lately are using Quickbooks,but the organizations I've come from have used other tools, including my favorite, which is Blackbaud's Financial Edge. So today, I want to share with you some of the differences in these two tools and help you determine when a new tool might make the most sense for your organization. 

     First of all, I want to clarify that this is not a paid or sponsored post. I have no affiliation or arrangements with Blackbaud, so this is not intended to be a promotion for them. It's just my own experience to help answer a question I hear regularly from nonprofit clients…

“How do we know when we need something more than QuickBooks?”

3 Challenges for Nonprofits Using Quickbooks

1. Limited Reporting Capabilities

     I think it's important to always begin with the end in mind when it comes to financial reporting. what does that mean? For example, QuickBooks has the basic ability to generate a Statement of Activities, Statement of Financial Position, or a very basic budget report. It’s able to get some things out that can help you to see where you're at and can then be bent or modified to function as cash flow planning resources. But, Blackbaud’s Financial Edge has tons of different configurations! I have found that the budget reporting and the management of the resources (from a cashflow standpoint) can be done so much more effectively with Blackbaud Financial Edge. So if you're bumping into that challenge and you're a QuickBooks user, you might want to consider another solution. Although I'm just listing one today, there are many more on the market. 

Restricted Fund Tracking

     Tracking donor-restricted funds in Quickbooks is a very common frustration for nonprofits, which is why I’ve created an entire playlist of step-by-step tutorial videos here to help make this more feasible within Quickbooks. 

While restricted funds can be tracked in Quickbooks using classes, you have to make sure that every in and out has a class or the reports simply won’t work, which can be quite frustrating because it's very easy to miss. I have some little tools I use to help me check for this, but it still becomes frustrating when you start to get a lot of these things going on. I love that Financial Edge from Blackbaud actually has rules to make sure that when you have restricted funds, you're coding every transaction so you can feel assured that your balances are correct. It also has really strong reporting balances that can show you beginning of the year activities, ins and outs, and then ending fund balance. This tool offers really exceptional reporting that just isn’t available in Quickbooks. 

990 Reporting

      If you need to report your expenses by function and then allocate by program or support costs, which we often think about management in general and fundraising, you might be getting to a place where having a tool to do these allocations becomes beneficial. Blackbaud’s Financial Edge is also really helpful in this reporting scenario. 

2. Independent Audit Preparation

     If your nonprofit has to have a financial statement audit by an independent CPA, that means that your financial records have to be presented in accordance with Generally Accepted Accounting Principles or GAAP. This is one place where Quickbooks really struggles. It struggles with accounts payable and accrual tools. Sure, you can make it work, but it's glitchy and it's easy to miss and make a mistake. The other problem is that there's no fixed asset or depreciation solution integrated in QuickBooks. So if independent audits are a requirement for you and you’re still using Quickbooks, I highly recommend that you start looking at other solutions. 

3. Grants Allocation

     Allocation of grants is probably one of the most common frustrations I see with nonprofit clients using Quickbooks. If the nonprofit has multiple grants and they need to allocate expenses including salaries across multiple programs, multiple grants or multiple restricted funds (depending on how they've been set up), this will result in a lot of manual entries and a ton of month end and year end work. This particular situation is one of the most common reasons that I would advise a client to move over to a more robust accounting tool.

     Once again, the tool I have experience with is Blackbaud Financial Edge, but it’s not the only Quickbooks alternative on the market. When you’re ready to make the move, you’ll want to explain, “Let's spend a little bit more money on our software, which will easily be offset by the savings in staff time and improved accuracy.”

     That’s my high level review of when you might think QuickBooks is not enough and might want to look at some other solutions. If you’d like more nonprofit financial tips just like this delivered to your inbox, you can subscribe to my weekly blog here. If you’d like some help with a specific situation in your nonprofit, you can schedule a strategic consult with me here. I look forward to serving you!