Nonprofit accounting software: Is it time to upgrade your ERP?
- Nonprofits struggling with slow reporting, burnout, cumbersome manual systems, limited constituent reach and poor visibility for leadership will typically benefit by upgrading their ERP or accounting software.
- A modern, cloud-based ERP helps nonprofits to make smarter strategic decisions, improve organizational performance, impress donors and create a more effective infrastructure to backstop constituent work.
- To make the ERP upgrade process a success, build internal momentum by regularly communicating the benefits to your team, leverage advisory support and consistently block time in your work schedule to work on integrating your new ERP into your core workflows.
For busy nonprofit teams juggling a host of day-to-day responsibilities, upgrading to a new enterprise resource planning (ERP) platform may not feel like a high priority. But at what point does running your nonprofit on outdated accounting software cause more pain than it’s worth?
If you’re struggling with slow and cumbersome reporting that’s making it tough to understand how your organization is performing, dealing with staff frustrated by long onboarding cycles or simply can’t get the right data in front of the right people, it’s time to start planning an ERP upgrade.
Keep reading to learn more.
When do nonprofits need to upgrade their accounting software or ERPs?
Nonprofits should invest in a new ERP or accounting software solution when their current system is significantly harming their ability to function as an organization. Here are key red flags to watch for:
- Slow and cumbersome reporting: Your ERP or accounting system is set up to report on the financial state of your organization. However, if you are using an older system or working out of spreadsheets, this can delay reporting time and give you a financial picture that is weeks or even months out of date.
- Difficult systems: Your nonprofit may still use an accounting system built for the organization as it was five, 10 or even 15 years in the past. This system may no longer support your current operations, funding streams, or reporting requirements, and can also make training new employees very difficult. This can leave you reliant on one or a small handful of employees who understand how your current system works — but what happens when those employees move on?
- Lack of data for leadership: High-performing organizations are constantly assessing how they use resources and whether they are meeting operational goals. However, outdated systems make it hard to get the right data in front of the right people, forcing leaders to navigate and make decisions based on incomplete information.
- Disconnected systems: Without a modern ERP or similar solution, your data will likely be siloed between different systems, like those for constituent services, CRM, finances and events. This hampers visibility and makes it harder to clearly assess your organizational performance.
- Challenges serving constituents: You can’t serve your constituents without effective operations. While organizations are rightly focused on their core mission work, outdated infrastructure makes that work harder to accomplish, blunting your reach and impact.
- Human error: Spreadsheet-based reporting systems, especially, are not just slow but prone to human error. These systems also require a significant amount of time to oversee, taking your team away from higher-impact tasks.
If you’re struggling with any of these pain points, your ERP or accounting system could probably use a refresh.
What are the benefits of a modern ERP for nonprofits?
Implementing a modern, cloud-based ERP can boost performance throughout your organization, reduce burnout and help your leadership team make smarter decisions. You’ll also be able to increase donor confidence by providing more detailed, accurate reporting on your impact.
Here’s more detail on key benefits nonprofits typically see from an ERP update:
1. Smarter strategic decisions
Better visibility drives smarter strategic decisions. Your leaders can view real-time financial and performance data from dashboards, analyze budgets and get a clear picture of how your organization is functioning.
2. Smoother staff transitions
A modern ERP makes it much easier to bring in new staff. The cost and time for onboarding drops significantly because you can train team members much faster on a modern system that’s been designed for ease of use.
3. Reduced employee turnover
Modern systems reduce your employee turnover by creating a better employee experience. Removing the stress of having to work with cumbersome, outdated systems improves morale and mitigates the risk of burnout.
4. Stronger board relations
Board members can feel more comfortable with the status of your nonprofit. Your board can connect financial performance to strategic goals when updating your strategic plan and also track KPIs over time.
5. Improved donor confidence
Your ERP delivers a stronger accounting foundation that donors will value. For example, you’ll be more audit-ready, earn better ratings from charity rating organizations and inspire confidence from donors, which is especially useful during a moment when federal funding has become less reliable.
What are the next steps for nonprofits to upgrade their ERP or accounting system?
Upgrading your ERP can feel overwhelming — but it doesn’t have to be. Leveraging support from a third-party advisor can simplify the process and allow you to more effectively implement improvements to your workflows and processes.
Here are four key action steps to follow:
1. Build internal support for an ERP upgrade
Your ERP upgrade process will be much more likely to succeed if your team is on board. Build internal support by identifying specific problems within your organization that a new ERP can solve and raising awareness about how that change could help your team work more effectively. Your finance director or CFO can play a key role here by highlighting the limitations of your current accounting approach and the benefits of a faster, more reliable system.
2. Find an advisor
The right software matters, but how you implement it plays just a big a role in the success or failure of your ERP upgrade. An advisor can guide you through the process of choosing an ERP and putting it to work within your nonprofit. Choose an advisor with experience in both technology and the nonprofit sector, as nonprofits have different needs than for-profit companies.
3. Work with your advisor to choose and implement an ERP
Rather than simply fire off sales queries to ERP companies, work with your advisor to assess different options to decide which makes the most sense for your nonprofit. Don’t assume whatever your peer organizations are using is necessarily the best choice.
Internally, you also need to designate a project manager or change champion to serve as the point person for the ERP process to shepherd it through your organization and keep your team accountable.
4. Maintain momentum
Because an ERP upgrade takes time, it’s easy to get excited and then lose momentum. To succeed, you’ll need to consistently make this process a priority for your team. Maintain buy-in by continuing to communicate the benefits of a new ERP to your team and block time on your team’s schedule every week to actually work on the upgrade. People need space to be successful here, so you need to intentionally create that space.
How Wipfli can help
We help nonprofit organizations to improve performance, upgrade technology and expand impact. Let’s talk about your goals and how strategies like an ERP transformation can help you achieve them. Start a conversation.
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