How Nonprofit Leaders Can Regain Control of Their Chart of Accounts

Leading a successful, honest nonprofit requires a lot of attention to detail. With regulators and watchdogs breathing down your neck, standards boards making the reporting process more complicated than ever, and more competition for donor and grantor money, running a nonprofit is more challenging than ever.

Many Reporting Challenges, Many Stakeholders

How many people do you answer to? How many different ways do you have to answer a question? At a traditional small or medium for-profit company, answering these questions is often somewhat straightforward. However, for a financial professional at a nonprofit, this is much more disparate, and many stakeholders expect ad hoc reporting from the finance department for a much more disparate set of metrics and entities.

Think of what you need to track, how you need to track it, and who needs these questions answered. How often do you need to drill down to a specific metric to answer the questions of a potential or current large donor or grantor who wants to see if the money is being used effectively? How fast do these entities want this information?

The landscape is complex, with financial leaders at nonprofits facing the following battle, answering questions from stakeholders about many different metrics and dimensions:

Worse yet, if you’re like so many others, you have to make all of this reporting happen in spreadsheets. This means more time, effort, and unfortunately, errors as you attempt to cut and paste data between spreadsheets. This poses a problem, creating an environment in which nearly 90% of spreadsheets have errors.

The Answer: Simplify, Categorize, and Automate

When you need to answer multiple questions from multiple people about multiple data—fast, the easiest way to make this happen is through point-and-click reporting and automation. This is where Sage Intacct is built to meet the needs of nonprofit organizations, letting you get set up with point-and-click tagging, categorization, and customization. Better yet, add multiple attributes to a single element to improve analysis and comparison.

The Problem with Spreadsheets: Unnecessary Complexity

A recent webcast, The Modern Day General Ledger: Leveraging Cloud Technology for NFP Accounting, explored the challenges that even a nonprofit with a simple structure faces to account for a task like printing. This example nonprofit had a relatively simple setup:

• Five Funds: G&A, School, Facilities, Cap Assets, and Debts
• Four Grants: Federal, State, Local, Corporate
• Three Programs: Fundraising, Management/General, and Other
• One Restriction: Unrestricted/Restricted

With a spreadsheet-based approach, this nonprofit will need 60 different combinations of accounts—just to accomplish some form of printing. If you add a new grant, guess what, the account just grew from 60 to 75. Add on this another program (now at 5/5/4/1), it grows to 100. Maybe the grantor has a specific restriction, and you’re up to 200 combinations of numbers.

The Answer: Smarter Chart of Accounts

On the other hand, with a smarter solution like Sage Intacct, you can tag an action or line item as you need, reducing errors and speeding up the reporting process. Rather than setting up dozens or hundreds of different combinations, just select printing. From there, you can move down a list of drop-down menus so that the expense is sent to the right location. This presents less chance for a finger slip throwing everything out of whack. On top of this, you can even scan the invoice so that even in an audit, you can track down when, where, and how something happened.

Bringing it All Together: Answering the Who, What, and Where

By taking advantage of a smarter chart of accounts, it becomes easier than ever to answer the who, what, and where (when it needs to be answered). Through dimension-based accounting, nonprofit financial leaders can tag a transaction or line item in any combination they see fit. Sage Intacct offers eight standard dimensions, but takes this one step further by allowing you to tailor a dimension as needed:

What This All Means

You may be thinking, “So what?” Good question, with a much better answer.

You want to save time, right? You want to generate more revenue for your mission, right? You want to make your own life easier, right?

That’s what dimension-based reporting is for. By taking advantage of flexible dimensions, you can improve the quality of your reports, you can do so in less time, and you can answer questions like “should we make this purchase now?” or “how can I be sure my money is going where it needs to?” quickly, easily, and accurately.

Learn More: Sage Intacct Making Life Easier for Thousands of Companies and Nonprofits

With over 11,000 highly satisfied customers, many of them in the nonprofit space, Sage Intacct has become a leader in the movement to improve the lives of nonprofit leaders and cut down the red tape between them and those they hope to serve. Whether the nonprofit is a church, association, charity, or school, they have been there, helping finance professionals to save time and money, making life easier, and helping these organizations get closer to accomplishing their mission. We welcome you to watch the entire webcast from Sage Intacct, and read some of the following case studies to learn more:

• Education Pioneers
• MHA: An Association of Montana Health Care Providers
• USA Fencing