Running a nonprofit organisation or an NGO comes with multiple challenges. Along with working to create an impact, NGOs must also manage their finances properly. Right from tracking donations to maintaining transparency and complying with regulations, financial management is an important part of their operations.
Relying on manual methods or basic tools often leads to errors and wasted time and this is why accounting software for nonprofits in India becomes necessary.
These software tools are specially made to meet the needs of nonprofits, helping them manage funds, generate accurate reports, and stay audit-ready. With the right software, organisations can focus more on their mission and less on the complexities of financial management.
Challenges That Nonprofits Face While Managing Finances
Nonprofit organisations face unique financial management challenges that can slow down their speed to achieve their mission. Here are some of the key issues they encounter!
- Compliance with Regulation issues
When running an NGO, you must comply with legal and tax regulations. The rules related to these regulations, such as the Foreign Contribution Regulation Act and Income Tax Act provisions, can be overwhelming, especially in terms of time and hassle.
- Tracking fundings
An NGO can receive funding in a number of ways, such as grants, fundraiser events, voluntary donations, etc. These findings need to be segregated for self-sustenance and allocation for certain functions. This is where software can help track and manage them.
- Budget Management
There are several processes that an NGO handles, such as partnership management, humanitarian assistance, campaigning, etc. All these processes require careful budgeting and funding, and without accounting software, budgeting these processes can be tough.
- Limited Resources
Not all, but some NGOs tend to have limited resources. This is the reason why they aren’t sure about where to invest first, i.e. in staff development, tech upgrades, or financial systems. Accounting software can provide a clear view of their needs and help in making informed decisions.
- Transparency and accountability
When an NGO receives funds from some donor, it is crucial to garner and maintain their trust to secure future funding. A clear and accurate report highlighting the places and processes where the fund was spent can be helpful here. Accounting software can be the perfect pick here.
Key Features of Accounting Software for Nonprofits
The accounting software for nonprofits in India is different from other accounting software in terms of features. Based on the challenges, here are some of the must-have features in accounting software!
- Fund accounting
The accounting software should have a fund accounting feature that helps them track and manage finances separately. This should include separating revenue, expenses, and assets from distinct funding sources.
- Donation tracking
Donations to a non-profit can come from various sources, such as individuals, businesses, and other entities. The software should have a clean interface to track these donations, along with automated acknowledgements.
- Grant oversight
Just like donations, NGOs can also receive grants from government and private organisations. Hence, the software should have a dedicated feature for managing and monitoring grants. This should include sources of grants, 990 form restrictions, specific usage requirements, and the impact of the grant via reporting features.
- Multiple payment options
Funding is necessary for an NGO to operate. Therefore, they need to have all sorts of payment methods for the donors, such as NEFT, UPI, IMPS, debit and credit cards, e-wallets, cheques, etc.
- Data backup
Donors would love to know how their funds are used and their impact. Therefore, it is important to have all relevant data stored somewhere safe. Accounting software should provide the feature of data backup, both offline and online.
Benefits of Using Accounting Software
As per stats, around 64% of business owners manage their books themselves. And accounting software can greatly improve this book management process. Here are some benefits of accounting software for nonprofits in India.
- The audit trail
With a clear view of the changes made to the transactions and financial information, the audit trail can tell you who made the changes and why. It also becomes easier to track mistakes, stop fraud, and follow the rules and regulations.
- Better forecasting and planning
With accounting software, it becomes easier to plan and forecast the funds. An NGO might know when their funds are going to arrive, and with the software, it becomes easier for them to allot the funds to a particular task based on the financial goals. This helps in the sustainability of their purpose and maximising their affirmative influence.
- Better accessibility
While offline books can be tough to comprehend and access at times, cloud-based accounting software makes it easier for NGOs to access the relevant data from anywhere on a simple smartphone with an internet connection.
- Process automation
There are several routine processes for NGOs to handle, such as handling payables, expenses, bank reconciliation, and more. Automation of these routine processes with accounting software can save time, hassle, and chances of error. As per stats, by implementing accounts payable automation, companies can save $16 per invoice.
- Cost-saving
Without accounting software, you may require additional staff members to handle the overhead accounting tasks, such as tracking administrative costs, recording and categorising expenses, etc. Accounting software can automate these tasks and help in saving costs.
Popular Accounting Software for Nonprofits in India
There are a number of accounting software for Nonprofits in India. However, here is a quick overview of the most popular ones.
| Accounting Software | Description | Key Features |
| Mocha Accounting | Mocha accounting is a utility-based software for businesses. For nonprofits, it has some relevant features for tracking capital flow, expenses, data security, etc. |
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| VasyERP | VasyERP is an awesome accounting tool for NGOs that lets you connect it to your NGO website. With seamless management of donors and beneficiaries, the tool ensures zero errors. |
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| Zoho Books | By far, one of the most advanced accounting software is Zoho Books. It is packed with multiple features to make your NGO efforts easy, including multi-currency support. |
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| Precoro | This is a fresh tool on the list that makes accounting for NGOs super easy with easy-to-use and value-for-money USPs. |
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| Xero | The last one on this list is Xero, which is also one of the best accounting software for nonprofits in India. You can even get a discount on its subscription if you are a registered NGO. |
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Choosing the Right Software for Your Nonprofit
Whether you are running a single NGO or multiple ones, do look for these features in the accounting software.
- Cost: The number one factor that you need to consider is the cost, as NGOs are not profit-centred organisations. Go for software that is affordable while having all the crucial features.
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- Features: Check the features of the software closely. Choose the tool that has donation tracking, multi-currency support, cloud-based access, security, process automation, integrations, and reporting features.
- Easy to use: Accounting software should be easy to use. Make sure you look for an interactive UI, easy-to-find options, faster data synchronisation, etc., features to reduce the learning curve.
- Scalability: When your efforts will yield better results for the NGO, there will be a need to scale your operations. An accounting software that can handle multiple donors, volunteers, staff members, and transactions will be important.
- Compliance: Accounting software that complies with specific accounting standards and regulations helps in establishing trust in the eyes of the vendors. Moreover, it also prevents errors and penalisation by eliminating inaccurate reports.
Real-Life Examples and Success Stories
There are some worthy real-life examples of NGOs that have enhanced their operations with the help of great accounting software. Here are some of them!
- A Nonprofit Bookkeeping Firm
With the use of accounting software for nonprofits in India, an NGO saved countless hours of writing checks and tracking down executives for signatures manually. By accurate figures, the company saved 6 hours each month to focus on more important tasks.
- Connections to Success and Vermont Adult Learning
To solve the issues of categorising transactions, reporting income, and meeting compliance, companies like Connections to Success and Vermont Adult Learning used The Charity CFO assistance. With the help of its accounting services, these brands easily patched their accounting issues, such as money tracking, scalability, compliance management, and operating bulky software.
Conclusion
Nonprofit organisations may have a lot on their plate, such as transaction tracking, fund tracking, grant overview, meeting compliance requirements, etc. Parallel to their other important goals, managing these aspects can be critical. Accounting software for nonprofits in India can be of great help here. With some of the most advanced features, such as AI and automation, NGOs can perfectly simplify their finances while focusing on their noble efforts.
To make sure that you don’t miss any critical details about your expenses, choose the best accounting software. Do check the software and its functionality by scheduling a demo before picking one.
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