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To effectively achieve your mission, your organization’s accounting system must align with the unique demands of nonprofit operations, ensuring transparency, compliance, and efficient resource management.
Nonprofits need nonprofit-specific accounting software because it tracks restricted and unrestricted funds, meets FASB- and GASB-compliance standards, and provides detailed reporting for grants and donors. These features enhance an organization’s transparency, accountability, and operational efficiency.
QuickBooks is a popular accounting software for small businesses that many nonprofits use. As time goes by, however, many organizations discover that spreadsheets and double entries pile up, inefficiencies and errors mount, and the simplest tasks become unnecessarily complex.
QuickBooks Limitations for Nonprofits
As nonprofits grow in complexity and scale, QuickBooks can create limitations. QuickBooks users frequently struggle with the following:
Growth Constraints: Designed for small businesses, nonprofits will need to rely on superfluous workarounds as they have to expand financial management needs, such as handling complex budgeting, reporting, or grant management.
Nonprofit-Specific Needs: Only nonprofit accounting software can handle compliance and nonprofit-specific reporting standards, like creating and reporting on a Statement of Activities.
Limited Budgeting: Nonprofits require multi-year or project-specific budgeting to align with grants and programs. While QuickBooks offers limited budgeting capabilities, most nonprofits still handle their budget in spreadsheets. That’s because nonprofits must account for funding sources in their budgets and create individual budgets for different grants and funding sources.
Limited Reports: Similarly, most QuickBooks reports need more detail to create reports for individual funding sources. Since many grant providers set unique reporting requirements, you may also handle this additional complexity in a spreadsheet.
For example, the Community Action Agency of Butte County struggled to manage its $7.5 million budget funded by nearly 30 different funding sources in QuickBooks. Learn why they switched to MIP Accounting.
Why It’s Time to Move on from QuickBooks
Lacking these capabilities and other core functionalities unnecessarily strains your team’s time and resources.
Nonprofit accounting software is created for nonprofit’s unique and specific needs. From tracking funds from multiple sources to reducing reporting time and meeting compliance and reporting requirements, nonprofit accounting software overcomes the limitations of QuickBooks and positions your finance team to provide real-time reporting insights, as well as the financial transparency needed to make critical business decisions.
If you’re wondering if it’s time to make the switch, here are four signs you should move on from QuickBooks:
1. You’re Using Spreadsheets for Something Your Software Should Be Doing
If your growth is causing you to export data as a spreadsheet so you can slice and dice it how you want, it’s time for an upgrade.
Nonprofit software handles all accounting from within the program, eliminating spreadsheets and workarounds to tailor QuickBooks to your organization. Nonprofit software features a flexible Chart of Accounts tailored to your organization.
2. Your Organization Is Growing or Getting More Funding
With every source of funding comes a new entity to report financials. It’s simple enough to handle a few grants in a spreadsheet. However, the process becomes complicated and time-consuming once you’re working with more significant sums of money from more grant providers.
3. You Have Complex, Multidimensional Reporting Needs
Nonprofits need to create custom reports for every funder backing them. That requires more than generating reports separated by class. You often need to track expenditures and income for several programs, split between several funding sources, which requires more advanced analytics and reports that track several dimensions to satisfy funders.
Nonprofits need to show accountability in their spending by tracking restricted funds and generating audit-ready statements. Accounting software features advanced, multidimensional reporting and keeps your organization compliant with state and national standards.
“[With QuickBooks] we could easily do things with our funds and grants that are flat-out wrong and never know it, which could get us into a lot of trouble,” Dana Campbell, CFO of Community Action Agency of Butte County, said. “… A main advantage of MIP is we’re able to adapt to each funding stream’s unique conditions.”
4. You Need More Time to Focus on Your Mission
Wrestling with QuickBooks decreases efficiency. From entering the same data more than once to pulling custom reports via spreadsheets or building your audit trail by hand, switching to nonprofit accounting software gets that time back and increases your finance team’s efficiency.
Nonprofit accounting software automates manual tasks and follows nonprofit accounting rules, so you can do more in just a few clicks. When evaluating nonprofit accounting systems consider:
- Comprehensive feature sets, such as budgeting tools, dashboards, and grant management
- If the software comes with strong customer support and training resources for ease of use
- Compatibility with existing tools and workflows, ensuring seamless integration
If your organization is ready to learn more, the Nonprofit Accounting Buyer’s Guide showcases how nonprofit accounting software works in different nonprofit scenarios, essential features to look for, and how to get started and get the most out of your software.
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