Generating Revenue From Not-for-Profit Software Firms that specialize should see their not-for-profit revenues increasing. By Carly Lombardo-Bohach Apr 30, 2004 Many not-for-profits (NFPs) need to move beyond off-the-shelf accounting software packages, and onto packages that can handle their complex needs. In turn, accountants, resellers, and software vendors agree the market for NFP software is growing and they’re stepping up to the plate in consulting on the various software. Customizing to Needs The JMT Consulting Group, located in Brewster, N.Y., achieves a 20-percent revenue growth each year by providing non-profit clients with recommendations for software solutions. “We work hard to match up the best solution to the client’s needs and expertise,” says Jacqueline Tiso, president. JMT exclusively serves not-for-profits and feels the combination of software with turnkey solutions and fixed fee consulting services that encompass all costs of a project including design, implementation, training, and ongoing support contributes to the firm’s success. JMT’s team includes CPAs, Microsoft Certified System Engineer technology experts, and Best Software authorized personnel. “We work closely with our vendor of choice, Best Software, because we feel our clients are best served when there is a partnership between the software vendor, the VAR, and the client,” says Tiso. In fact, JMT and Best’s NonProfit and Government Division NonProfit Series was selected by the Boys & Girls Clubs of America as its recommended vendor for fund accounting software and will recommend the solution to its more than 3,000 clubs nationwide. JMT will provide services for the system set up, chart of accounts design and implementation of the NonProfit Series solution. “Our goal has been to provide the clubs with a solution that is usable right out of the box, for a reasonable fee they can afford—$2,295,” adds Tiso. The solution JMT designed for the clubs is a complete package, including MIP Nonprofits software, maintenance, unlimited phone support, training, customized database, and a customized user manual. “The database includes a chart of accounts customized specifically for B&GC clubs, so they are able to track and report their funding sources, their programs, and their club locations, which provides the clubs a level of standardization nationally that they have not previously had,” says Tiso. Similar to JMT, Gunnip and Co, especially the Business Technology Solutions division, is busy carving out a niche for itself in the NFP accounting arena. “All of our consultants possess an expertise in fund accounting, and it is important to us that our consultants understand the accounting issues in addition to the software issues,” says Cliff Hunter, CPA and head of the technology unit. The Wilmington, Del.-based Gunnip offers nonprofits a product mix from Best Software’s MIP Information Products subsidiary: MIP Intro, MIP Fund Accounting Pro, and SQL-based Advantage Series. The firm has a strong client base in various fields such as religious, cultural, community service-based organizations, and educational institutions. Hunter says, “We found when dealing with NFPs we go in and install, and train staff on the product. However, there is a high turnover when it comes to NFPs, and NFPs have a hard time transitioning new people on the
software. We realize NFPs don’t have an endless supply of money, and with the Best products people can be easily trained.” Although working with NFPs isn’t the biggest revenue generator, “It is an important value-added service for our firm to have. We offer much needed services and allow NFPs to efficiently meet their missions and goals,” adds Hunter. Actually, he has found most NFPs need strong reporting capabilities, and Gunnip helps them meet these needs. James Stern, director of business development explains, “To be able to report easily and track across multiple years on permanently restricted fund, temporarily restricted and unrestricted funds, means NFPs are really taking a large pool of information in the database and segregating that information into reports. These reports are set up so that the requestor who asked for the report gets specifically what they asked for. For example, a board member might request a report on funds dispersed from a specific grant over two years. We help them set up the reports to read as they want.” Recently, Gunnip completed an engagement for a Catholic Charities organization that was trying to consolidate some old software systems into one new integrated package. The biggest objective was to get timely, accurate reporting to their board. The organization has 29 locations, 800 employees, and 40,000 clients, and has to track 75 grant sources, and allocate money across 200 different programs over multiple fiscal years. “They wanted to be able to not only generate these reports but also easily export them to Excel so they can be sent electronically. The modules implemented at Catholic Charities were; GL, AP, AR, Allocations, Back Reconciliation, Budget, Data Import/Export, and Nightshift,” adds Stern. The total implementation period lasted a couple of months, and the organization’s involvement and training lasted for a couple of weeks. The ROI on the project is expected to be less than a year and the implementation came in under budget. Although the nonprofit arena is not yet a big revenue generator for Aurora, Ill-based ICS Advantage, Serenic Software has caused the firm to move into the market. John Kleb, partner, says, “On the accounting side of NFPs there is a significant need for current technology—it’s a vacuum that needs to be filled. There is always a lack of integration with nonprofit products. There can be as many as six products doing pieces of the business and sometimes they talk to each other, and sometimes they don’t.” One reason Kleb is excited about Serenic’s Navigator product is because it was developed for Microsoft Business Solutions, Navision Edition. “Navigator was built by developers who knew the business they were building for. Also, Navision provided Serenic with development training and complete source code to its accounting software, which has enabled Serenic to make the product available quickly. In addition, if a customer requests a feature that does not exist it can be added to the core product due to the Microsoft engine,” says Kleb. Kleb has found many of his projects have involved changing NFPs from the DOS to the Windows version of the software. Some of the key features users find helpful are the ability to manage multiple funds with automated balancing of funds and instant access to critical financial data across any time frame. Also, the ability to allocate transactions as they are entered and posted, plus the ability to check against available budget amounts. Reselling Opportunities Allowing smaller not-for-profits to automate without spending too much, is important to Ed Bender, president of Application Solutions. The Fort Lauderdale, Fla.-based firm does so by providing NFPs with Open Systems Traverse. Bender, says, “With all the not-for-profit systems out there, the reason Open Systems provides an excellent solutions for NFPs is Traverse allows us to offer a lower price. While the competition offers more bells and whistles than you can imagine, that often equates to a complicated system to learn and use. Traverse provides the standard features organizations need.”
For example, API is working on an installation at the Georgia Cancer Coalition (GCC) that is handling many funds and sub funds. The GCC is a statewide network of people and organizations such as doctors, hospitals, government agencies, public health service, survivor and community health groups, universities, and industries, all working together to reduce suffering from cancer. Since the Coalition gets it funds from several sources, tobacco settlements being the main source, they plan their programs and projects on an annual basis. They include education, research, and patient programs. “Traverse lets them track the planned budgets for each of their many programs against the actual expenses as they occur during he year. Traverse takes designated expenses and automatically allocates them across several programs,” says Bender. The implementation took about one week for the basic set up, and Bender charges $125 per hour. Furthermore, Bender has developed an add-on to Traverse, called Donor Solutions. Donor Solutions will add fundraising and donor tracking capabilities to Traverse. Bender will unveil the donor tracking at the June Open Systems conference and it will start at $1,500. He says, “Right now, a fairly low percentage of our business comes from NFPs but with the Donor solution we anticipate by next year 50 percent of our revenue will be generated by NFPs.” Meanwhile, Maureen Williams, president of Applied Business Services, has been targeting NFPs and schools for the past five years. “With a large number of not-for-profits organizations in the Washington, D.C. metropolitan area, we find there is a strong need for financial software. Most NFP organizations are passionate about their mission, however, at times, the administration of financial systems tends to not receive the priority deserved and is somewhat neglected. We feel that if we can make financial systems more efficient then it will free up staff to do more,” says Williams. Two problems Williams encounters are NFPs duplicating data, and not having enough time to keep their systems up to date. To relieve NFPs of these problems, Applied Business Services streamlines the software by creating imports from ADP, Blackbaud’s the Raisers Edge, and Point-of-Sale systems, all to solve timing problems. Williams says, “Working with NFPs has helped our company grow at a rate of 16 percent a year. Not to mention, employee satisfaction is also attained as we work together to help and support our clients. It really feels good to go home at night knowing that you have contributed to helping a NFP with their mission.” Dedicated to the Market Mark McCallick, managing director of application software for CBIZ of Orange County has been working exclusively with nonprofit organizations for 22 years. And, he believes in the market. “The NFP market is very viable but it should not be entered into with simply a profit motive. Only firms that truly dedicate themselves to learning the NFP market and understanding their needs will make it in this market. Firms who try to do this as an aside will not benefit themselves or their clients,” he says. The firm has discovered one problem is nonprofit organizations using for profit software. McCallick explains, “NFPs have unique needs in reporting internally such as grant and project reporting and billing granting agencies such as federal, state, and local governments. Also, reporting to the public via their audits requires knowledge of GAAP and GAAS.” In fact, 90 percent of what the firm does for their clients involves reporting. And, CBIZ works with Blackbaud software to meet reporting needs. “We chose to work with Blackbaud because we can merge our expertise in Nonprofits with a software company that has been working exclusively in the industry as long as we have.” According to McCallick, Blackbaud, especially in the last three years since revamping its channel program, has given the firm an excellent tool to assist its client base and solidify relationships with clients. There are several features that serve the firm’s NFP clients well such as the Project, Grants & Endowment module, which assists
NFPs in reporting to and billing grantors. Also, allocation of costs is of paramount importance, and Blackbaud’s reporting gives the user control of rows and columns in reports. In addition, McCallick is on the Advisory Board at California State University, Fullerton, which in conjunction with the University has designed a certificate program, “Financial Planning & Management for Nonprofit Organizations.” He explains, “Our goal is to try and fill the void of education and training that exists in financial management specifically geared toward the nonprofit sector. “NFPs need specialized software to accommodate their needs,” says James Clarkson Jr., manager at the accounting firm of Needel, Welch & Stone and part owner of an affiliated consulting firm, New England Systems and Solutions. Both firms are located in Rockland, Mass., and specialize in Intuit’s FundWare because of its “adaptability to changing environments.” Clarkson starts by presenting FundWare to a new client and discusses their existing pains. “Most often the pains start with reporting, grant tracking, tracking items over multiple fiscal years, and FundWare allows us to slice and dice reports with out having to reinvent the wheel, and it has 60 plus templates in the GL alone,” says Clarkson. However, Clarkson’s main focus is training. “We tend to go on-site to assist the company with its live data, and then we sit down with the staff and train them on day-to-day issues. Once the data is in the system, we go back in and do follow-up training on reports,” he says. A typical engagement includes a needs analysis, internal requirements, customization if needed, and training, and costs anywhere from $6,000 to $10,000. Driving Forces Accountants and consultants agree—they anticipate a significant continued growth in the NFP arena as more NFPs see the need to streamline their processes in order to trim their operating costs. Also, their business efforts with NFPs provide a reasonable profit that contributes and will continue to contribute to their long-term business strategies. Carly Lombardo-Bohach is associate editor of Accounting Technology.