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3 Essential Features That Define True Fund Accounting Software

3 Essential Features That Define True Fund Accounting Software

Running your nonprofit on a typical accounting software, like QuickBooks®, isn’t going to cut it nowadays if you want to be successful.

If you want your nonprofit to thrive, it’s important to have software that is designed specifically for handling the complexities of your nonprofit organization.

With hundreds of software packages available on the market, knowing the right one to choose from can be confusing. So, we created a list of three features that your nonprofit NEEDS to have in your True Fund Accounting software. These three features include a secure audit trail, individual user rights, and fund management.

Having these features in your software will solve three major problems that nonprofits often face—transparency, accountability, and security.

So, let’s breakdown how these features can improve your nonprofit!

Secure Audit Trail

There are two distinct reasons why a nonprofit needs a secure audit trail. The first reason is for fraud prevention and the other is for obtaining grants.

When it comes to fraud prevention, a secure audit trail ensures that your organization can’t delete entries—you can only adjust them. And those adjustments are tracked.

If you can delete entries, you leave your nonprofit wide open for possible theft and errors. It can throw off your books and cause long-term harm if missing entries were discovered during an audit.

If you always have a record of adjustments, you will always know who changed the entry, why they did, and when they did it. That way you’re aware of any changes and can stay on top of possible problems.

Now let’s move on to how a secure audit trail can help you gain more funding.

When it comes to grants, there are two types: restricted and unrestricted.

Unrestricted grants mean you can use those funds without stipulations. Restricted grants, on the other hand, come with stipulations and those stipulations often ask for you to perform an audit.

If your financials aren’t in order, you could lose that grant money before you even receive it. You could also lose the grant money later on if you let your fund tracking go by the wayside. A secure audit trail makes sure your financials stay transparent.

A secure audit trail isn’t only necessary when it comes to accounting software, it’s downright one of the best software features for your nonprofit. It works to keep your organization safe.

What could be better than that?

Individual User Rights

Having multiple people involved with your day-to-day financial activities isn’t that uncommon for many nonprofits. You have people looking at your finances or making changes to your records, whether they’re board members or even volunteers.

If you have too many hands in the cookie jar, you’re bound to have more problems.

To combat this issue, you need to have the power to assign limitations and roles to everyone who has access your financials. You need to be able to restrict access to certain areas.

If you’re letting everyone have full access, who’s to say some won’t abuse it? By assigning user rights, you will know who’s made changes to your accounts and when those changes were made.

Assigning individual user rights gives you more security by making sure each user is held accountable for their actions, limiting the amount of errors and fraud that could happen.

Fund Management

With a software like QuickBooks, your organization is running off repurposed for-profit software and can hold you back.

Essentially, a for-profit business pools all its revenue together to be spent however it intends to. Unlike a for-profit business, a nonprofit needs to be able to break up its revenue into separate accounts.

With True Fund accounting software, you have a multidimensional chart of accounts that can keep track of every donation and grant, telling you how much money you received, when you received it, and how it was dispersed.

Not having that tracking ability means you’ll be buried in spreadsheets trying to keep up.

The point is that for-profit businesses don’t run with the same legal complexities that nonprofits do, so you might end up with errors and spending more time trying to ensure that your funds are being dispersed as they should be.


The software you choose impacts your nonprofit’s potential. With these three features, you get an honest software that’s built with True Fund accounting principles in mind. Without the right software, your nonprofit will struggle in the long run.

Don’t get a software that holds you back, get a software that makes your nonprofit limitless!

Audit Trail, Fraud Prevention, Fund Management, Security, True Fund Accounting