7 Things Your Nonprofit Accounting & Reporting System Needs
If you want to ramp up your financial reporting system, or are thinking of upgrading, do your homework! Be sure to talk to current users, ask peer organizations what they are using, and consult with your auditor. Make sure that any system you invest in has at least the following capabilities, and that those capabilities can be used easily.
- Meets all the reporting requirements of the IRS 990, 990N, and 990T. No sense in not being able to turn these documents out easily. The same caution goes for your state reporting.
- Can provide the needed information to your auditor. The less time the auditors have to spend digging out what they need, the lower your audit bill should be.
- Can report flexibly to different audiences. Most board members don’t want to dig through a 20 page printout. Most staff don’t need to. The ability to differentiate is key. Also, graphs and charts are really important for some users. This capability should be built in, and not require exporting to a spreadsheet.
- Can report in real time. Waiting to the end of the month is just so….last century, and can leave you wanting at times when you need to decide now.
- Can back out cost shifting. You need to make your resource allocation decisions based on real data. And, cost shifting situations can, over time, get so complicated, that you do not want to require some poor staff person to do this by hand.
- Can generate reports for online review. Mostly this means that the reporting system can develop documents in .pdf format, but check with your webmaster to make sure that this is easy, and easily updated. If you have a board portal on your website and can integrate the financial reporting with that, all the better.
- Can easily integrate with other database and reporting systems. For example, your financial system should be able to connect seamlessly with your grant management and donor tracking system.
Good financial reporting is a key part of good stewardship. More than ever it is essential to have the ability to be responsive to financial inquiry, whether from inside or outside your nonprofit. Make sure you have the right tool for the job.
Read more in our case study written by Peter Brinkerhoff.