Fund Accounting for Nonprofits: A Responsible, Accessible Approach

Posted by CuriousRubik on 22 Aug, 2015

 

The accounting needs of a small, local charity and a global NGO start from the same basic concept – effective stewardship of donor funds.

Most nonprofits must break down income and expenditures on a program-by-program basis, which means maintaining a distinct ledger for each operating fund. For instance, a simple monthly office rent bill for $1,000 may need to be proportionally distributed across a half-dozen programs which operate out of that office.

Further, that bill might be paid from multiple different donors. These funds are often governed by different rules and procedures for receiving income and allocating expenditures, defined by major donors or the type of services provided by each program. This can make accounting procedures between funds about as similar as balancing the books in Boise and Brazil.

The inherently complex accounting challenges nonprofits face require accounting systems that balance best practices with both power and flexibility. At NetSuite.org, NetSuite’s Corporate Citizenship arm, we’re working to increase the suitability of our market-leading cloud ERP for nonprofit organizations. We recognized that the NetSuite platform was already a favorite of diverse businesses operating in multiple locations under accounting rules which varied from country to country.

We also recognized that many commercial ERP systems lacked the unique terminology, reporting criteria and rules of this sector. These realizations led us to the decision to apply what we knew about comprehensive, automated support for multiple, consolidated ledgers to the needs of nonprofits.

Working with one of our SuiteCloud development partners, NetSuite can offer a fund accounting solution which gives organizations superior control over the balance sheet of any number of programs. With this platform, nonprofits can allocate costs on a percentage, hourly or fixed costbasis, with the freedom to configure different rules for each fund.

The enhanced, real-time controls make it possible for leaders to identify shortfalls and surpluses on a fund-by-fund basis, making it easier to avoid overspending. With each fund's balance sheet available at a glance,organizations can quickly identify shortfalls and adjust services or reallocateadministrative costs to funds with an operating surplus and the freedom to take on a greater share of operating expenses.

In the name of good donor stewardship, organizations must have fund accounting capabilities which enable them to allocate expenses according to rules which differ from program to program.

Today,many organizations struggle with transparency and year-end reporting because of the complicated manual gyrations that are required to ensure each fund is following the correct set of balance sheet rules. We're thrilled to have the flexibility to adapt our scalable, proven cloud ERP solution to the advantage of our nonprofit users, and help more organizations spend less time hunched over the books.

At NetSuite, we believe good corporate citizenship is no longer just about giving away a little money. It’s about putting the strengths of the company to work to make the world a better place. For that reason, we leverage our greatest assets, our people and our product on behalf of social enterprises and charities around the world. Through donations of the NetSuite product, social solutions like fund accounting and grants management and pro bono services from our employees, we are helping our grantees more efficiently achieve their missions. 

 Source of the blog: Netsuite blog

Topics: Accounting, General Business, ERP

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