What is a charity and why do they need accounting software?

• Charity

Charitable organisations or charities are established to promote and serve the public good. By conducting educational, religious, medical or other activities that serve the public interest, charities are able to achieve their philanthropic or humanitarian goals and continue to promote social wellbeing.

Without funding, however, charities cannot survive. They require such support to be able to accomplish their goals and implement their projects. A private foundation is usually funded by a group of individuals or an endowment, whilst a public charity gets the majority of its support from the public or any entity that wishes to donate to its causes.

1. The importance of managing finances

Since finance plays such a big role in the operation of a charity, efficient financial management is crucial to the organisation – not only for project delivery but also for the sake of transparency. Charities need to build and maintain trust and confidence with their donors; therefore, the proper handling of finances should be a top priority.

In fact, even the smallest charity requires the expertise of a small team well-versed in finance – or at least people with good financial skills and knowledge of financial management. Whether they are volunteers, staff members or trustees, what matters is they have financial skills to contribute to the organisation.

Although people assume that charity finance managers should have specific charity-related accounting experience, what they need is good financial knowledge and excellent communication skills. They need to be able to ask the right questions, organise documentation, make the required calculations, translate and interpret financial information, and communicate it to others in a simple yet meaningful manner.

Charities also need to be more resourceful in finding ways and means to ease task performance – including financial management.

2. Streamlining tasks with accounting software

The fact of the matter is that many charities are underfunded and usually don’t have the luxury of having a dedicated finance team. Finding free information and resources, therefore, can make a huge difference in the proper handling of finances.

The paid or free accounting software charities use can help reduce the paperwork and eliminate the need for manual calculations.

This takes away the stress of getting the job done right so they can focus on more important tasks, such as financial planning, project delivery and sourcing more funds.