But the needs of nonprofits still make them good clients and prospects for accounting firms, although the question may be whether they afford the services that they need. Underlying all is the fact that the people who run nonprofits are often not business people and they need to be taught the basics. And while technology may offer solutions to their business problems, it can be difficult to show these workers how such products are worth the purchase.
"From a systems standpoint, from an infrastructure standpoint, the people who drive nonprofits are end-results oriented and not profit oriented," says Peter Stam, CEO of AccuFund, a Needham, Mass.-based company that publishes NFP accounting software. With for-profit corporations, "It’s easier to justify accounting software, and show how it will improve speed and performance," he continues.
The media is full of reports about the difficulty that charitable organizations face, although not all NFPs are in that category. Nevertheless, small NFPs of all types often lack resources, including the ability to pay and keep staff. For that reason, good software that can both solve business problems and is easy to learn is critical.
Stam notes AccuFund targets "grant-driven people, community action agencies, job training agencies" that are doing better than the charities because they are receiving stimulus funds. Such companies represent about 50 percent of AccuFund's business, with the other 50 percent governmental agencies.
But like the charities, the other NFPs can be a tough sell because of their non-business orientation. And while software can improve operations, the turnover rate means software must be easy to learn, "You have to show them it will be easier for the staff to learn and it will be easier to go through the transition," Stam says.
In general, nonprofits, like for-profit organizations, need better access to information and nonprofit accounting software increasingly emphasizes getting at the information, not just recording the numbers.
For example, CMS Professional 2010 for Fund applications, along with its business accounting and POS counterparts from Cougar Mountain Software emphasizes enhanced filtering and internal and external reporting abilities for retrieving data and presenting information. Those abilities include drill-down capabilities and easier export of reports to Excel.
Similarly, Blackbaud has made it easier for users of its Finance Edge accounting package to work and play with Excel via the introduction of a module, F9 for The Financial Edge, that that enables them to create customized financial reports in Excel.
AccuFund's latest iteration, Version 3.09 of the AccuFund Accounting Suite, enables users emailing reporting directly from within the system to break out specific page or pages for automatic distribution. The Report Writer can also be used to distribute notices and statements.
Similarly, Sage MIP Fund Accounting, v.10.2 which was released in December, made it easier to send email messages directly from within the product. It also includes a variety of reporting options, such as new State Unemployment Tax Act reporting fields and a more flexible GASB module, along with improved report drill-down functions from within financial statements.
Technology, however, is inextricably linked to accounting at NFPs. And that probably explains why CPA firms and affiliates have stayed in the reselling business for NFP software when many have gotten out of VAR operations for general accounting products.
"Our best success in resellers has been with people who are associated with a CPA firm or previously have been within a CPA firm," says Stam.
That's because many of the issues are far more about accounting and business process than about the technology itself.
"When you are installing a system, you are helping determine all of the reporting to the funders, helping them set up cost allocations," notes Scheffki. Implementations of NFP software often turn into sessions to teach accounting and good business practices.
Nonprofits might hold a fundraiser and forget to issue 1099s, Scheffki says. Many need help in setting up payroll, pension programs and dealing with sales tax issues. And those with multiple funders need advice on allocating and reporting costs.
"They have a lot of reporting back to funders and it can take all different shapes and sizes," says Scheffki, who notes it's important "Just to help them get a methodology together so they can report back to their funders."
