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Read the Nonprofit Finance Executive's Guide to ERP

Nonprofit finances are complicated by aging, disconnected systems, paper-heavy processes, and overreliance on Excel trackers. Workarounds eat up valuable staff time. 

There is a better way. Fill out the form for instant access to our detailed guide that includes:

  • Vendor assessment checklists

  • How to write an RFP

  • What to consider before you migrate your data

  • What to (actually) expect during ERP implementation

 

 

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Preview: Nonprofit Finance Executive's Guide to ERP

SECTION THREE

How to Build a Vendor Checklist

Essentials of a Nonprofit ERP

If a base ERP often falls short in handling nonprofit requirements, how can nonprofits assess the capabilities of a specialized ERP? If you’re considering an investment as significant as ERP, identifying what truly matters to your nonprofit is essential. Consider the following focus areas to compile a vendor checklist that’s built for nonprofit realities. 

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1. Fund Accounting and Dimension-Based COA

  • True Fund Segregation: Automatically manage due-to/due-from entries for restricted, unrestricted, capital, or endowment funds in real time.
  • Multiple Dimensions: Go beyond simple department codes to categorize transactions by program, grant, location, or campaign. Filter or consolidate these for precise reporting.
  • Hybrid Chart of Accounts: Retain a clean GL structure while adding necessary layers of complexity for nonprofit accounting, avoiding a segmented Chart of Accounts and the inefficiencies that approach causes.
  • Restrictions and Validation: Ensure that each transaction only posts to valid fund–dimension combinations, preventing coding errors and preserving data integrity.

2. Budgeting

  • Multi-Level Budget Plans: Create operating, capital, or project-level budgets, each with distinct timelines and targets. Consolidate them for board or executive reporting.
  • Collaborative Budget Contribution: Allow department managers to propose and adjust their own budgets, feeding into a master set for final review.
  • Scenario Planning: Run different “what-if” scenarios (such as new grants, mid-year budget cuts) and lock down final versions with approvals.
  • Real-Time Budget Checks: Warn or block transactions that would exceed available funding before invoices or POs are processed.
  • Encumbrances and Commitments: Reserve funding as soon as a requisition is approved or a purchase order is issued, giving immediate visibility into committed vs. uncommitted funds and encumbrances.

3. Project/Grant Tracking

    • Grant Life Cycle Management: Track multi-year start and end dates, allowable expense categories, cost matching requirements, and iterative reporting deadlines.
    • Flexible Cost Allocations: Distribute overhead or shared costs to multiple projects or grants based on percentages, employee headcount, or any other definable metric.

 

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