Applying the appropriate technology to financial management can enormously simplify a controller’s efforts. A well-structured fund-accounting system enables flexible reporting, such as reporting on a single funding source over multiple years and multiple projects, or tracking restricted versus unrestricted funds for a group of projects or funding sources.
While the basic accounting principles are the same for conventional businesses and nonprofit organizations, the differences between the two are so significant, that without major customization, for-profit software simply cannot handle a nonprofit’s unique accounting needs.
Financial management of a nonprofit is like running different, yet related companies under one roof. Within those “companies” are sets of funds that must be handled uniquely, depending upon the restrictions imposed by the funding agencies. Reporting to the funding sources and meeting compliance reviews can be your most time-consuming activities. In addition, your management — from program directors to the board — needs detailed information on how each funding source is being used.