Fund Accounting for Nonprofits: A Responsible, Accessible Approach

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 cost

basis, 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 reallocate

administrative 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. To learn more

about NetSuite’s fund accounting solution, or the NetSuite.org product

donation program, please visit www.NetSuite.org.

- David Geilhufe, Program Manager, NetSuite.org

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