Practical Tips for Choosing a New Not-for-Profit Accounting/ERP System

If your not-for-profit’s accounting or ERP system is causing more frustration than efficiency, it may be a sign that you’ve outgrown it. When systems no longer meet an organization’s needs, the next step is choosing a new solution—an important decision that often brings both excitement and anxiety.

There is no perfect system for everyone. Each organization must identify the system that best fits its structure, culture, and long-term goals. The four-step framework below can help nonprofits approach this process with confidence and intention.

1. Readiness: Is Your Organization Prepared for Change?

The organization needs to be ready to make a change, not just the accounting or finance department.

Determine if the organization is ready to make the change and is willing to invest time and resources to achieve the desired future state. Has the organization determined appropriate funding and allocated a budget for the software, implementation, and support for year one? What about for the ongoing subscription and support? This is especially important if the organization is going from an on-premises system or inexpensive solution like QuickBooks, Sage 100, or Xero. If price is a barrier, consider looking at upgrading your existing system to a cloud version.

Have clarity on the approval process to ensure appropriate input and a timeline is established. Input needs to be received from users of the system, the IT department or consultant, users of financial information coming from the system, and internal owners of other key systems that might need to integrate with the accounting/ERP system (like Payroll/HRIS, Donor Management/CRM, Grant Management, Client Revenue/Billing, etc.). Build into the timeline leadership support, contract review, and any required board or committee approval.

Document the needs and/or problems the organization is trying to solve. This is the basis of what is driving the system change now versus last year or next year and from a high-level what a change is hoping to accomplish (the “Why”).  Some examples may be that the organization needs a cloud-based system, integrations, automations, artificial intelligence functionality, better reporting, dashboards, etc.

Establish a timeline and work backwards from your target go-live. Keep in mind that a software implementation can take anywhere from 4-12 months, depending on the type of organization you are, the modules you will be implementing and the systems you want to integrate. Choosing a system can take anywhere from 1-12 months depending on your complexity, whether the project champion is internal staff versus an external consultant, whether you’re using a Request for Information (RFI) or Request for Proposal (RFP), and your overall approval process.

2. Infrastructure: Building Buy-In and Understanding Your Current State

For successful adoption of a new accounting/ERP system, it’s critical to get internal and external buy-in, understand how the existing processes and policies impact the system, and recognize there will be change to how things are done currently. Ideally, all of the existing processes are documented in writing and related policies can be found (i.e. signing authority, capitalization, gift acceptance, adding new vendors, etc.).

Internal input starts with staff being open to potentially changing the chart of accounts and current workflows that may have been in place for several years. Ask yourself the following questions:

• Can the accounting staff do their job in the system, or do they handle accounting outside the system? Have they had prior bad experience with software implementation that may bring bias into the process? Are there staff resources available to clean up prior data?
• Are department leaders provided with the financial information they need, especially budget-to-actual reports? Are they able to get what they need directly from the system (i.e., self-serve)?
• Is there a need for the system to be integrated with other systems, one-way or bi-directionally? How do the staff system owners feel about a change in the accounting/ERP system?
• Has the IT department weighed in on how the new system supports any policies for cloud-based solutions and security?
• Who are the primary stakeholders that should be on the team to make the final decision?

External input includes understanding how the board, committees, and professional services firms (i.e., auditors, tax accountants, bankers, etc.) understand and use the financial reports. Do they have accurate and timely information needed for decision making?

3. Functional Requirements: Defining What the System Must Do

This phase is my favorite part of the software selection process because there is an opportunity to incorporate feedback from internal and external stakeholders and imagine a better future state for the organization. Rather than viewing the project as an accounting upgrade, it becomes an organizational strategy conversation.

Baseline features most not-for-profit organizations need include:

• Strong security
• Ease of use and training resources
• General ledger, cash management, AP/AR
• Fund accounting
• Reporting and dashboards
• Audit trails

Additional areas to explore:

• Insights gathered through staff and stakeholder feedback
• Features in the current system that must be preserved
• Spreadsheets used today because the system lacks functionality
• Reports the current system cannot generate for staff, leadership, or funders
• Time consuming processes that automation could improve
• Grant tracking needs by funder, program, or year
• Expected organizational growth over the next five years
• Systems (payroll, CRM, grants management, expense management, budgeting) that should integrate—or possibly be replaced
• Advanced modules needed (fixed assets, allocations, inventory, loan management)
• Industry-specific requirements (such as HIPAA compliance or managing endowments and donor advised funds)

Once the requirements are put together, rank them in order of priority. At a minimum, bucket them into must haves, nice to haves, and future needs. Surprisingly, once an organization goes through this exercise, about one-third realize their existing accounting/ERP system can meet the majority of their must haves and staff just need training and a possible chart of accounts refresh.

4. Evaluation: Making a Confident Decision

This is probably the toughest part of the entire journey of choosing a new accounting/ERP system because the fear of making the wrong decision shows up. We have found if the organization follows the first three steps, this can be a very objective decision by having a tool for the team to use. The form would be used during the demonstration process to numerically rate if the solutions can meet the requirements, as well as grow with you. Each person would fill out their own form and compare totals for each solution.

Some additional items to consider helping set the organization up for success during implementation include:

• Determine if the organization wants to buy from the software company directly with an assigned implementor or from a reseller of your choosing with specialized nonprofit industry expertise that will do both? Note: Choosing the right partner to help you with the implementation and provide ongoing optimization and support is just as important as choosing the right system.
• Do you want a cookie cutter implementation with templates, do you need more configurable options, or will you want an experienced implementer that can provide guidance, best practices and project management support?
• Did you meet members of the team that will actually be involved in the implementation during the sales process?
• Do the implementors not only have expertise with the software solution, but also have accounting knowledge and an understanding of the nonprofit industry. This includes any verticals within the industry, such as community foundations, schools, and healthcare organizations to name a few.

Based on the additional items, add the following to the evaluation form: Do you trust the implementor’s skills, knowledge and reputation.

Conclusion

By following this four‑step approach—readiness, infrastructure, functional requirements, and evaluation—your nonprofit will be positioned to select a system that not only alleviates your current pain points but strengthens operations for years to come. The right accounting/ERP solution offers more than efficiency: it equips your organization with automation, integration, and insights that support stronger decision‑making and mission success.

For assistance in identifying a new system that works for your organization, connect with a Clark Nuber Software Solutions professional. Additionally, future virtual Sage Intacct demonstrations and nonprofit essential workshops can be found on the Clark Nuber website calendar.