By Jeremy Potoka
Cloud Solutions Architect, SWK Technologies
The movement from on-premise or client-hosted ERP software to the cloud has been pervasive over the past decade. Although nonprofit organizations historically have been quick to adopt cloud technology in some areas of their business (like Payroll, Volunteer Management, and CRM/Donor Management), many today continue do their core nonprofit accounting and financial management in legacy ERP systems.
One driving factor for this slow transition is the simple fact that many ERP systems don’t really fit the needs of a nonprofit organization. As software publishers begin to ship newer products, they sometimes lack the specific functionality required by certain sectors, such as nonprofits. Food Banks, Foundations, and Associations are perfect examples of nonprofit organizations that need robust functionality, not just cloud ERP software. These types of organizations are our social entrepreneurs, governed by a board and audited yearly by CPA firms. They must carefully evaluate cloud ERP software and make sure they are a fit for niche specific needs, such as Grant Management, Fund Accounting, and Encumbrance Accounting.
There are three primary reasons for why it is now safe to move nonprofit accounting and finance back-end systems to a nonprofit cloud ERP.
1. The Millennial Workforce:
The current wave of recent college graduates are digital natives. Although much of their interaction with technology may take place on platforms like Instagram, Snapchat and Uber, millennials are entering the workforce in swarms and have no concept of a legacy system. In order to stay relevant and attract new talent, it is imperative to move to nonprofit accounting applications that the workforce is comfortable using. Logging into a client server application to gain access to grid-like screens with no flexibility will both confuse and frustrate digital natives.
The nonprofits that are successful in moving to cloud ERP offer this generation of workers quick dashboards to view KPIs, native mobile applications and a way to communicate within the application (using messages, tasks and activities), rather than outside of it (via email, phone call, or even a walk to the other side of the office. Digital natives have grown up with ease of access to any data available to them. Even something as simple as running a report without any drill-down or export capability will limit the way you can use these new staff members within your nonprofit organization.
2. Mature Cloud ERP Systems:
Since cloud ERP solutions have been adopted, software publishers have deepened their footprint within the Nonprofit vertical. Cloud ERP systems like Acumatica now offer robust solutions for fund accounting (automatic due to/due from processing) and a native grant management module. The speed at which ERP vendors iterate new functionality is much faster in the cloud ERP world than in legacy ERP applications. In a legacy ERP system, it was very common to see organizations bend and flex the product to do what they needed to serve their organization.
One great example of this is grant management. Many nonprofits that are still running a legacy ERP system are using a project accounting module to accomplish the management of their grants. Although this system worked, newer cloud ERP systems like Acumatica powered by NonProfitPlus allow you to natively manage grants through a grant management module. This type of module allows for multi-year budgets, purpose restrictions and employee restrictions.
3. Expectant Boards:
As the governing entity of nonprofit organizations, boards need quick access to data to make decisions. Board members themselves come from a variety of backgrounds: medical, legal, business, technology, engineering, etc. These folks are used to dealing with latest and greatest technology during their 9 to 5 job, and the expectation to use similar systems in the boardroom is ever growing.
Over the next 3 to 5 years, we’re going to see more boards who want to go paperless in nonprofit accounting. The days of flipping through packets of financial statements prepared by the CFO are close to over. Boards want to visualize the data and focus on making informed decisions fast. These expectations will push more nonprofits to move to cloud accounting systems where board members can access reports at home, view charts and graphs via mobile device, and store meeting minutes in a shared drive or wiki that resides where the data or report lives.
Transform Nonprofit Accounting with Modern Cloud ERP
Although the transition has been slow, cloud ERP vendors now provide the robust nonprofit functionality built on cloud technology. As more legacy products are reaching end of life, nonprofits can rest assured that there are strong cloud ERP systems to which they can migrate. A successful migration to the cloud is a win-win for nonprofit organizations: they gain efficiency and easy access to data, allowing them to focus on doing good in the world.
Read our E-book to learn the five traits of highly effective nonprofit accounting software that allow nonprofit organizations to capture the most in their financial reporting.