The BEST Accounting Software for NonprofitsAug 10, 2023
What Is The Best Accounting Software for Nonprofits?
As a nonprofit leader, I know you have a lot on your plate! But, managing finances doesn't have to be one of those stressful things. Having the right accounting software can absolutely impact your organizational stress in two key ways:
- Financial records are easier to accurately maintain when you're using solid nonprofit accounting software.
- More importantly, your financial reporting is more actionable when you find the best accounting software for your nonprofit organization. Your financial reports should not just help you look back and reflect on the past, but also inform your future opportunities and decisions.
Today, I want to share a high level comparison between the features of Quickbooks and the features of two other growth-level accounting systems.
Quickbooks for Nonprofits: An Excellent Starting Point
One of the biggest advantages of starting with Quickbooks is its ease of use. It’s a true, plug-and-play option that helps you get the ball rolling with minimal complication. Another advantage of Quickbooks for nonprofits is its low cost. If you’re looking for an inexpensive, built-in, plug-and-play solution Quickbooks offers a great starter accounting solution for most nonprofits. However, despite its ease of use and low barrier to entry, there are a few things that Quickbooks simply cannot do, leaving nonprofits to search for their next step as they grow.
Quickbooks vs. Blackbaud Financial Edge or MIP Fund Accounting
Today we’ll compare the features of Quickbooks to Blackbaud’s Financial Edge and MIP Fund Accounting, which are both accounting systems that I have personally used in my previous nonprofit roles. There are certainly other options out there and I’m not endorsing any particular product, but these are just the two Quickbooks alternatives for nonprofits that I’m most familiar with.
Built-in Nonprofit Financial Reporting
While Quickbooks is not the ideal tool for nonprofit financial reporting, there are some workarounds that make it an option, albeit a cumbersome one. (Watch this video to see how to track restricted funds in Quickbooks) But, when your organization progresses to a certain level of growth, a more robust nonprofit software with built-in reporting starts to make sense. Both the Blackbaud Financial Edge and MIP Fund Accounting systems place powerful tools at your fingertips, like dashboards and financial analytics that are curated for you.
Built-in Audit Trail
As a CPA, and former nonprofit auditor, one thing I really dislike about Quickbooks is the fact that it allows you to change historical records. In fact, it lets you change anything you want. For example, I recently had a situation in which a client’s bank got out of sync with Quickbooks and when they were eventually synced back up, Quickbooks duplicated a lot of records, which then had to be sorted through and removed. I don’t like this ability to remove records because it also removes the audit trail.
Unlike Quickbooks, the Blackbaud Financial Edge and MIP Fund Accounting systems track everything in the realm of financial records. This allows counting periods to be closed, entries to be monitored, and keeps transactions from being put in the wrong reporting period.
Other Features Missing From Quickbooks
Unlike Quickbooks, Blackbaud Financial Edge and MIP Fund Accounting both offer…
- excellent accounts payable sub ledgers
- integrations with donor management tools, enabling the accounting software and donor software to communicate and reconcile automatically while retaining the coding of restrictions, thus eliminating the need to enter these transactions separately in two systems
- better query capabilities that transform historical data into useful and actionable guidance for future decisions
The Bottom Line
With a starting price tag of around $2,000 per year, Quickbooks offers incredible value and phenomenal ease of use as a plug-and-play tool that gets the job done without breaking the bank. It’s roughly half the price of the other accounting software I’ve discussed here today, and I’m a fan of Quickbooks for what it offers to young nonprofits. While it’s not ideal, there are certainly workarounds for some of its friction points that can allow it to take you further down the road as you grow.
But if your nonprofit is approaching the outer limits of Quickbooks and you find yourself needing the additional features described above, please know that you have several other options with impressive capabilities to choose from whenever the features justify the additional cost. With a starting price of around $4,000 per year, I don’t recommend starting a brand new nonprofit with Blackbaud Financial Edge or MIP Fund Accounting. It’s perfectly okay to make the best of what you can afford and move up as you grow when it makes more sense. Ultimately, you’ll need to weigh the costs and benefits of any accounting tool to make sure you’re utilizing enough of its features and increasing your efficiency to a point that makes the software cost worthwhile.
Finally, there’s one more consideration that should absolutely be a factor when choosing the best accounting software for a nonprofit organization- security. Whenever you’re dealing with financial information, security has to be a top concern. When shopping for accounting software, make sure you understand how your data will be encrypted and logins will be kept secure. What are their disaster recovery plans and what happens in an unexpected security event?
Once you’ve answered these questions and found the right accounting software for your nonprofit, it truly will help you to focus more on your mission and make a greater impact. When you’re not distracted by the day-to-day accounting, you’re free to do the things you were called and positioned to do in the first place.
If you’re shopping for accounting software, you’re probably also trying to manage a lot of other financial tasks. That’s why I’ve created a free resource to help nonprofit leaders keep track of the routine financial tasks that happen each week, month, and year. I hope my Checklist of Key Financial Tasks is a helpful resource to you!
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