Financial Management Tools Every Nonprofit Should Use

Imagine this: that big grant deadline is looming, and you're still missing those balance sheets. You've looked under your desk, behind the trash can, and yes—even the dumpster outside. You're starting to panic.

Will you miss out on the grant? Will you lose your job? Will the nonprofit go under? Suddenly, it hits you—you've been putting off digitizing finances for years. If only you had a system in place, you wouldn't be in this mess.

Thankfully, there are incredible financial management tools available to help you organize and manage your nonprofit's finances efficiently.

In this guide, we'll explore the best financial management tools for nonprofits so you can avoid the last-minute scramble and stay on top of your organization's grants, donations, and fiscal stewardship.

Nonprofit financial management is more than "keeping the books balanced" for tax season. In many ways, effective financial management is the backbone of a nonprofit's future success.

Imagine tirelessly working on a mission that you deeply care about, only to find your efforts hampered by financial disarray. Unfortunately, this is all too real of a reality for many nonprofits.
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Effectively and efficiently managing your nonprofit's finances is a necessity. It’s a core piece of guiding important decisions regarding the future operations and growth of your organization's mission.

Here are some key reasons why prioritizing financial management is so crucial:

• Streamlines Grant Applications and Reporting: Quality financial management tools simplify the process of preparing all the necessary documentation for grant applications. The same goes for reporting on how your awarded grants were used.
• Eases Tax Season and Audit Preparations: A well-organized financial record system reduces headaches during tax season and when facing audits. It ensures that all financial information is in order, making compliance with regulations as straightforward of a process as possible.
• Provides a Clear Financial Overview: You must understand your organization's financial health to succeed. Having financial management tools in place is important for the long-term survival and strategic planning of a nonprofit. Without these tools, organizations are often caught in a vicious cycle of reactive rather than proactive management.

Financial management impacts not only day-to-day operations but also future planning.
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Fundraising staff are responsible for planning years into the future, a task that becomes nearly impossible without a solid foundation of financial management. Financial management tools can provide real-time insights into your organization’s financial status, revealing whether immediate fundraising efforts are needed or if there's a cushion to strategize long-term goals.

Of course, it's important to remember that certain financial software focus on specific aspects of financial management while others are more comprehensive. Some tools might excel in streamlining donation processing and donor communications, while others might be more adept at budgeting and expense management.

Keep reading for a breakdown of each so that you can identify the best solutions for your organization’s needs.

In the following sections we will break down six types of financial management tools, including accounting, donations, grant management, budgeting, financial dashboards, and educational resources.

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1. Accounting Software

The true value of accounting software lies in its ability to provide a comprehensive financial overview that enhances transparency and trust among an organization's stakeholders.

Many accounting software automate and simplify tasks like:

• Recording transactions
• Creating financial statements and reports
• Tracking expenses, revenue, etc.
• Developing budgets
• Bookkeeping
• Ensuring financial compliance

These capabilities are essential for nonprofits, which often operate on tight budgets and with limited staff. They not only save time and resources but also enable organizations to maintain accurate records, report financial health in real-time, and make informed decisions that align with their mission and goals.

Here are some top recommendations:

• Monkeypod: Specifically designed for nonprofits, Monkeypod offers an all-in-one solution that handles your accounting needs and integrates donor management. This makes it easy to see the full picture of your finances and donor relationships in one place. As far as price, Monkeypod is a middle-of-the-road option with their three subscription options.
• QuickBooks: QuickBooks is a popular choice among various organizations, both corporate and nonprofit. However, it offers specific functionalities tailored for nonprofits. Its versatility in handling accounting tasks, from fundraising to expense tracking, makes it a solid choice. QuickBooks is a tad pricer than its competitors, but it does offer a 30-day free trial.
• FreshBooks: Although not exclusively designed for nonprofits, FreshBooks offers simple, intuitive accounting solutions that can be beneficial for smaller nonprofits looking for an easy-to-use platform for their financial management. FreshBooks is an affordable option with different price tiers.

Each accounting software above provides features aimed at simplifying your financial management. Of course, choosing the right software for your organization will depend on your specific needs and budget.

2. Online Donation Platform

Online donation platforms provide a simple and secure way for donors to give and offer tools for nonprofits to create engaging campaigns, track donations, and communicate directly with their supporters.

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For a platform to effectively support nonprofits, it should include features like:

• Customizable donation pages
• Options for recurring donations
• Detailed reporting for tracking donor engagement and contributions
• Integrations with social media and email marketing tools

Here are some examples of top donation platforms:

• GoFundMe Charity: Known for its ease of use, GoFundMe Charity lets nonprofits set up fundraising campaigns with no upfront costs. It offers a wide range of tools, including customizable donation pages and social sharing options, making it easy to connect with a broader audience.
• GiveWP: Designed specifically for WordPress websites, GiveWP allows nonprofits to accept donations directly on their site and fully control their fundraising efforts. It supports a variety of donation methods and recurring donations and provides comprehensive reports and donor management tools.
• Classy: Classy provides a versatile fundraising platform. Its focus is on creating immersive campaign pages that tell a nonprofit’s story. It includes features for peer-to-peer fundraising, event management, and customizable donation forms.
• Givebutter: With Givebutter, nonprofits can set up donation pages, ticket sales for events, and crowdfunding campaigns. It also offers advanced features like text-to-donate and Venmo integration to make donating even more accessible for supporters.

By leveraging these platforms, nonprofits can simplify giving. Supporters can donate through various channels, and nonprofits can track the full scope of their fundraising efforts in one place.

3. Grant Management Software

As we all know, securing and managing grants can be a challenge. Each award comes with its own set of guidelines, reporting requirements, and financial management expectations.

But the good news is that technology has provided solutions to alleviate these challenges. Grant management software has become invaluable, not only for tracking applications and awards but also for facilitating the strategic planning necessary for long-term sustainability.
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One standout option in grant management software is Instrumentl. Instrumentl sets itself apart by offering a comprehensive suite of tools designed to streamline the entire grant lifecycle, including:

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• Smart matching to good-fit funders
• Deadline reminders and updates
• Documents Library
• Grant management calendar
• Awards tracking tool
• Payment tracking
• Spend-down reports
• and a whole lot more!

For example, the image below shows Instrumentl’s Payment tracking feature under the “Financials” tab:

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This easy-to-use tool allows you to track when you receive your awards, whether they are paid out in one-lump sums, through reimbursements, or in parts! This way, when an audit comes around, you’ll have all your payment information in one place.

A second example is the Documents Library shown here:

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For every individual grant you’re applying for, you have a place to store all relevant financial records. This way, when it's time to submit any required financial paperwork, you’ll have everything ready to go. This saves you from hours (and headaches) spent digging for documents.

For more insight, check out this detailed breakdown and comparison of the top grant management tools on the market!

4. Budgeting Tool

Budgeting is an essential practice for any kind of organization. Without a clear understanding of your finances, it's challenging to gauge your financial health or plan for future goals.

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Understanding financial planning and finding a budgeting method that fits your organization’s needs is essential. Whether that means using dedicated software or something as simple as a spreadsheet is up to you and your team!

Many of the accounting tools mentioned above offer budgeting assistance. However, it’s always a good idea to read up and learn more. Here are a few noteworthy resources to help you on your nonprofit budgeting journey:

• Financial Planning 101: How To Master Your Budgeting and Forecasting in 2024 w/ Don Needs
• How to Create a Budget for a Nonprofit Organization
• Budgeting and strategy resources from the Association of Nonprofit Accountants & Finance Professionals
• Budgeting for Nonprofits from the National Council of Nonprofits

Choosing the right tool depends on your specific needs, the complexity of your organization's financial situation, and your familiarity with budgeting concepts. No matter the size, adopting consistent budgeting practices is a step toward financial stability and success for your organization.

5. Financial Dashboard

Another key to success is integrating a financial dashboard with your bookkeeping software. This connection ensures your financial records are continuously updated and accurately reflected.

A dashboard offers:

• Real-time Overview: This tool allows key stakeholders, such as upper management and your board members, to quickly assess the organization's financial health at any time.
• Simplified Decision-Making: With up-to-date information, making informed decisions regarding budget allocations, fundraising strategies, and financial planning becomes much clearer and easier.
• Streamlined Reporting: Dashboards often automate the generation of financial reports, reducing manual effort and the potential for human error. This frees up more time for you!
• Enhanced Transparency: By providing an easily accessible overview of financials, stakeholders can clearly see where the organization stands financially, improving trust.

A few software that provide financial dashboards include:

• QuickBooks Dashboard
• Microsoft Power BI
• Xero's Dashboard

The image below shows an example of the QuickBooks dashboard specifically for nonprofits. As you can see, it shows items like cash flow, expenses, and sales in one concise place.

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Integrating a financial dashboard with your existing accounting software streamlines financial management and empowers your leadership team to make better, data-driven decisions.

6. Training Courses and Resources

Financial management and budgeting are responsibilities that span across all departments. Strive to foster a culture of financial literacy among your team—this will encourage a more cohesive approach to fiscal responsibility within your entire organization.

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Here are some avenues through which nonprofit professionals can enhance their financial management knowledge:

• Instrumentl Partner Webinars: Instrumentl offers partner webinars focusing on various aspects of nonprofit management, including financial management. These webinars are led by experts in the field and provide actionable insights. Instrumentl also offers free templates, including budget spreadsheets, financial planning documents, and audit checklists. These tools are invaluable for nonprofits looking to enhance their financial processes without significant investment.‍
• LinkedIn Learning: LinkedIn offers a wide range of courses tailored to nonprofit financial management. These include basic financial literacy, advanced financial modeling, and everything in between. LinkedIn Learning's platform provides the flexibility to learn at your own pace, making it ideal for busy professionals.‍
• Coursera: Coursera partners with universities and colleges to offer courses on nonprofit financial management, budgeting, and accounting. These courses often provide access to world-renowned instructors and university-level content without the heavy price tag of formal education.‍
• University Courses: Many universities offer specialized courses or certificates in nonprofit management. These often include comprehensive modules on financial strategies, reporting, and governance, providing in-depth knowledge and networking opportunities.

By leveraging these resources, nonprofit professionals like you can ensure your organization remains competitive and financially healthy. Continual learning in financial management not only empowers individuals but also strengthens the foundation upon which nonprofits operate, paving the way for greater impact and success.

Nonprofits have a wealth of tools at their disposal to manage their finances. Resources like accounting software, donation platforms, and budgeting tools can help improve your team's financial literacy and ensure the continued financial health of your nonprofit.

Consider Instrumentl not just as a grant prospecting platform but as a comprehensive solution for keeping your organization’s grant finances in order. With its payment tracking, awards reporting, and document storage, Instrumentl stands ready to support your nonprofit's financial health. Our tools enable you to focus more on your mission and less on financial complexities. Start exploring these tools today with your 14-day free trial.