What is fund accounting software and what is it for?

What is fund accounting?

Any charity or non-profit organisation is required to complete fund accounting. The process is designed to track how cash coming into the organisation is used, to determine whether any profit is being generated (as this is not what the organisation is intended for) and to make sure that it is being spent according to the intentions of the person who donated it.

It is different from traditional accounting in the sense that it focuses on accountability rather than profitability, and it plays a critical role in the reputation of a charity by ensuring that all activity is above board and the trust of the public is maintained.

Fund accounting is centred around three categories of finances. These are:

• Unrestricted income funds, which are permitted to be used for any of the charity’s permitted activities and can move around the organisation relatively freely. These include funds which have been designated for a certain purpose by the charity itself.
• Restricted income funds, which are limited in their use by the parameters set by whoever donated them. The wishes of the donor or the nature of an appeal may dictate that they can only be used for a certain aspect of the charity’s work.
• Restricted capital funds, which are not to be treated as income and should not be applied directly to the work of the charity.

Find out more from our fund accounting insights webinar.

What is fund accounting software?

Fund accounting software is designed to simplify and streamline fund accounting, by automating many of the more complicated aspects of the process. For organisations required to complete fund accounting on a regular basis, it can be a transformative addition to your existing accounting software package.

It helps to ensure compliance with fund accounting regulations and improves accountability across all departments in the organisation.

What are the features of fund accounting software?

Fund accounting software will often give you many of the same benefits as cloud accounting software - but it also has features which are uniquely useful to non-profit and charitable organisations which are required to carry out fund accounting. These include:

• Customised structures that reflect the priorities of the organisation and allow you to sort income and expenditure according to project, cost centre, campaign or funding source.
• Easy to use reports and dashboards which allow you to check budgets and keep tighter controls on spending.
• Maintaining multiple online accounts for the same organisation with one-click consolidation.
• Keeping on top of compliance obligations to regulators and the government with automated compliance reports.
• Connectivity with other specialised applications such as those for fundraising, membership management and event planning.

Find out more about fund accounting software

At AccountsIQ our accounting software covers every type of business, from charity accounting to private equity and venture capital accounting software. Find out more today about how we can help your organisation to move forward in the digital accounting age.