Efficient Accounting Software for Nonprofit Organizations

A nonprofit organization (NPO), contrary to what the name might imply, may be able to earn as much money as a profit-oriented business. The difference between the two entities is that an NPO doesn't distribute its surplus funds to employees and shareholders. Instead, an NPO uses its surplus funds for self-preservation or for activities that may further its goals.

With NPOs using funds as such, it becomes more important for these groups to support their internal organization with accounting processes. NPOs need accounting specialists to communicate the entity's financial status to major shareholders, investors, and controlling boards. Through accounting, an NPO can ensure management that every last cent from donations, grants, and other sources of funding have been used in activities relevant to the organization's objectives.


That's why many NPOs these days employ efficient in-house accounting departments. These departments are responsible for all accounting processes needed by the NPO, including financial reports, balance sheets, and reports for functional and individual expenses. These documents are not only important for the organization's controlling board and shareholders; they may also be required by the US Internal Revenue Service, especially if the NPO holds a tax-exempt status.

To keep up with all these responsibilities more easily, accounting teams of NPOs extensively rely on technology. It's not unusual for accounting departments these days to use computers and specially-designed accounting software programs. This nonprofit accounting software can prove to be invaluable in the fast, convenient generation of accurate financial reports.

Nonprofit accounting software is also helpful in tracking other categories of financial information such as budget, endowments and donations received, assets, and liabilities. The software may also help accounting teams handle tasks and responsibilities concerning fund accounting, which is an important aspect of any NPO. The software helps accounting teams do away with the task of manually preparing financial spreadsheets.

The accounting nonprofits need is clearly a thorough process that leaves no room for mistakes or inaccuracies. Any discrepancy in the NPOs' financial reports may get the organization in trouble with shareholders and the authorities. That's why the accounting departments of NPOs are lucky to have technology on their side.