Nonprofit Accounting Software Trends


In a recent report from Software Connect - a software consulting company providing research and recommendations to prospective software buyers - more than 500 nonprofit organizations and governmental entities were surveyed on their motivations and requirements for purchasing fund accounting software. Fund accounting software is optimized for nonprofit and governmental usage, and designed to improve allocation management, restriction tracking, and other nonprofit-specific accounting requirements.

The report sheds some light on the technical landscape of nonprofits and governmental entities. 37 percent of fund accounting software buyers are looking to replace a dated system. That's significantly higher than the 22 percent average across all software categories. Nonprofits are more likely to keep using old software out of perceived cost-effectiveness. Software is expensive, and upgrades can be a hard sell to cost-conscious board members (especially when "overhead" is still considered a dirty word). But in today's world of data breaches and increasing cyber security threats, an outdated system that leaves sensitive information exposed is a risk that doesn't pay off. Furthermore, any major system upgrade inevitably comes with a learning curve. Instead of spending the time to train staff on a brand-new system, it may make sense to budget for smaller, more frequent updates instead.

One way to prevent your accounting software from becoming obsolete is to opt for a cloud-hosted system. According to Software Connect's report, 60% of organizations have no preference between cloud-hosted or locally installed systems - which is surprising, considering the vast differences between these two deployment methods. Locally installed accounting software is restricted to specific computers and users. If you can only access your accounting software from your office desktop - not your laptop, home computer, or smartphone - you have a local install. This type of software can be expensive and time-consuming to upgrade. It's also difficult (or impossible) to grant access to temporary users, such as an auditor or financial consultant.

Cloud-hosted systems, on the other hand, are accessed over the internet. As long as you have an internet connection, you can log into your accounting system from any device. Maintenance and system administration is generally managed by the cloud service provider, and software updates tend to be frequent, minor upgrades rather than massive overhauls. This keeps your system consistently refreshed, instead of slowly growing more and more outdated.

Cloud accounting software also minimizes the up-front cost of launching a new system. The Software Connect report indicates a strong correlation between organizational size and budget - the smaller the organization, the less they have to spend on accounting software. A cloud-hosted subscription service, like QuickBooks Online, makes costs more manageable for small organizations by spreading out the expense through a regular monthly fee. For new or very small organizations, a cloud-hosted service is less risky than an expensive local install.

Nonprofit organizations have a duty to manage their finances responsibly. Part of this fiscal responsibility includes carefully assessing your accounting software. For more insights into nonprofit accounting software trends, view the full report on Software Connect.