NGOs and nonprofits have unique accounting needs that commercial ERP often handles poorly. This guide covers what to look for and how to configure ERP for nonprofit operations.
Fund Accounting vs Commercial Accounting
Commercial accounting asks: did we make a profit? Fund accounting asks: did we spend restricted funds according to donor intent? These are completely different questions requiring different systems.
Restricted vs Unrestricted Funds
Donor-restricted funds can only be spent on specified purposes. ERP must enforce these restrictions at transaction level — not just report on them after the fact.
Grant Management in ERP
Each grant has a budget, timeline, allowable costs, and reporting requirements. ERP must track all expenditures against each grant, flag over-spending, and generate the reports donors require.
Audit and Compliance for NGOs
NGO annual audits and donor audits require complete documentation. ERP audit trails, attached documents, and automated reports dramatically reduce audit preparation time.
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