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Why Fund Accounting is Different: Common Limitations of Commercial Accounting Software

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800.443.9441 solutions@blackbaud.com www.blackbaud.com © June 2016 Why Fund Accounting is Different: Common Limitations of Commercial Accounting Software FUND ACCOUNTING Continued To manage projects and programs, nonprofits must carefully track and report on segregated accounts in the form of funds. These funds must be treated as separate entities with independent general ledgers, individual income statements, and balance sheet reports. Nonprofits must then report in total across the entire organization. Commercial accounting systems like QuickBooks ® may be able to maintain separate revenue and expense accounts, but they co-mingle balance sheet accounts. This is not permitted in fund accounting. Grants, Endowments, and Fundraising Major donations and grants are commonly given with a set of requirements and responsibilities. These funds are deemed "restricted," and failure to demonstrate that restricted funds have been used correctly can have serious consequences, including loss of funding, loss of "With its integration into fundraising and executive decision support systems, Financial Edge ™ is a first-rate accounting solution that was created for, and has served well, the nonprofit sector." —Accounting Today Financial Edge NXT Vendor Activity Details

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