Fundraising Campaign: Non-Profit Accounting Software
Update on 2014-12-03: As can be seen, Conservancy sadly never reached our fundraising target for this project. However, as we promised below, we continue to work on this project. We'd really appreciate more donations, as we've needed to make a lot of compromises in our plans since we didn't reach our fundraising goal. We did complete Phase 0 described below (results are on our wiki), and Phase 1 now comprises the development of an REST API for double-entry accounting which many applications (including this one) can use.
Conservancy has a plan to help all non-profit organizations (NPOs) by creating an Open Source and Free Software accounting system usable by non-technical bookkeepers, accountants, and non-profit managers. You can help us do it by donating now.
To keep their books and produce annual government filings, most NPOs rely on proprietary software, paying exorbitant licensing fees. This is fundamentally at cross purposes with their underlying missions of charity, equality, democracy, and sharing.
You can help Conservancy fix this problem by donating now. We seek to raise $75,000 to employ a developer for one year to make substantial progress on this project.
This project has the potential to save the non-profit sector millions in licensing fees every year. Even non-profits that continue to use proprietary accounting software will benefit, since the existence of quality Open Source and Free Software for a particular task curtails predatory behavior by proprietary software companies, and creates a new standard of comparison.
But, more powerfully, this project's realization will increase the agility and collaborative potential for the non-profit sector — a boon to funders, boards, and employees — bringing the Free Software and general NPO communities into closer collaboration and understanding.
Thanks in advance for helping us develop Free Software to benefit all non-profit organizations, and the populations they serve.
Donors of $500 or more will be acknowledged in the THANKS file and other appropriate places in the codebase itself.
Endorsers of this effort include April, Fractured Atlas, The Free Software Foundation, Mozilla Foundation, GNOME Foundation, OpenHatch, Open Source Initiative, QuestionCopyright.org, and Software in the Public Interest; all encourage you to donate and support it.
Like many non-profit organizations (NPOs) in the USA, Conservancy's financial accounts are audited annually by an independent accounting firm; we recently completed our fiscal year 2011 audit. As usual, our auditors asked plenty of questions about our accounting software. Conservancy uses only Free Software, of course, centered around a set of straightforward reporting scripts that we created to run on top of Ledger CLI. (Conservancy's current configuration using Ledger CLI is publicly documented and explained.)
Our auditors were only familiar with proprietary accounting software, and
so our system seemed foreign to them, as it relies on Ledger CLI's text files, Emacs and
version control. During their questions
about our setup, we asked them to hypothetically prescribe a specific
proprietary software setup as a model for managing Conservancy's
accounts. Our chief auditor started by mentioning a few well-known
proprietary solutions. But then he paused and continued:
that Conservancy's a fiscal sponsor with so many temporarily restricted
accounts, existing systems really wouldn't do that good of a job for
Indeed, Conservancy reached out into the broader fiscal sponsorship community beyond the FLOSS NPO community and discovered that many larger fiscal sponsors — even those willing to use proprietary components — have cobbled together their own unique systems, idiosyncratically tailored to their specific environments. Thus, good, well-designed, and reusable accounting software for non-profit fiscal sponsorship is not just missing in the software freedom community; it's missing altogether.
The project that Conservancy proposes will take a modest step forward in creating a better solution for everyone. Many NPO leaders and academics agree with Conservancy about the immediate need for work to begin on this effort. April, Fractured Atlas, The Free Software Foundation, The Mozilla Foundation, The GNOME Foundation, OpenHatch, Open Source Initiative, QuestionCopyright.org, and Software in the Public Interest have all endorsed Conservancy's plan, and they encourage you to donate and support it.
Conservancy is uniquely qualified to undertake this task. Using only Free Software, Conservancy already meets the complex accounting challenges of earmarked, directed donations for over thirty different projects. We've learned much about this work in our first seven years of operation, and we're prepared to apply what we've learned to solve this problem not just for ourselves, but for anyone who seeks a solution that both respects software freedom and handles non-profit accounting for all sorts of NPOs, including fiscal sponsors. General NPO accounting is just a “base case” of fiscal sponsorship (i.e., an NPO is just a fiscal sponsor for one and only one specific project), and Conservancy therefore believes a solution that handles fiscal sponsors will also handle the simpler case as well.
Conservancy proposes to hire a software developer for one year to accomplish the first two phases of this project. Conservancy seeks to raise $75,000 toward this project to help cover salary and benefits for a full-time staffer to work on this project. We ask that you give generously via the donation buttons on this page to support our work.
Some Free Software accounting systems do exist. A previous informal survey of these systems that Conservancy conducted in 2007 led us to the conclusion that, in general, these systems were heavily geared toward for-profit endeavors, ignored the unique needs of NPOs generally, and were completely hopeless for the specific needs of a fiscal sponsoring organization. Conservancy's assessment at the time was that these challenges could be addressed only with a large rewrite of one of these systems. Conservancy chose Ledger CLI precisely because it provided flexibility and configurability not present in any other Free Software double-entry accounting system.
However, while that previous informal survey informs Conservancy's existing hypothesis that Ledger CLI is the right base system here, Conservancy will first test that hypothesis. The first phase of this project (estimated to last approximately 6-8 full-time weeks) will produce a written survey of all known Free Software accounting systems, and indicate what challenges exist to adapt such systems for the needs of NPOs. The Free Software Foundation has pledged their help in the evaluation of SQL-Ledger, and the GNOME Foundation has pledged their help in the evaluation of GNUcash (which they currently use, respectively).
Phase 1 of the project will select the preferred codebase from Phase 0, and improve that system to create a basic accounting system for small-to-medium sized USA NPOs (i.e., Form 990-filers) — including fiscal sponsors — with the following features:
- Basic accounts payable/receivable (with invoicing)
- Tracking and reporting of non-profit income types (related business income, unrelated business taxable income, donations, etc.)
- Basic backup documentation tracking for expenses and payments
- Basic bank statement reconciliation reporting
- Basic annual audit preparation reporting (A prototype of this portion is already complete and has been relied on for real-life audits; but the prototype is just a hack and needs to be rewritten.)
- Ability to easily handle all these features on a project-by-project subset of the accounts, and to easily export and excise that subset from the system. (i.e., support for temporarily restricted assets, earmarked for fiscal-sponsored projects)
- Multi-currency support and reporting
We will consider the first year of this project successful only if all these functions can be performed by a bookkeeper who is generally qualified as a bookkeeper, but not necessarily familiar with standard Free Software tools such as GNU/Linux, Emacs, version control, and command line scripts. This requirement is essential: Conservancy's existing system using Ledger CLI already provides sufficient functionality to manage non-profit accounting, but our system requires a bookkeeper who is also adept with the aforementioned tools already.
Finally, while the first year of work focuses on USA NPO needs, Conservancy seeks to lead an international effort, and welcomes contributions and input from everyone in the non-profit community from around the world. Conservancy has created a mailing list for discussion of this project and a Wiki for collaboration and encourages interested parties from around the world to join the mailing list and contribute to the project!
Why Conservancy Must Fund This Work
As it stands, nearly all Open Source and Free Software NPOs either use proprietary software, or fully outsource their bookkeeping and accounting to third-parties. Those that don't do so (such as Conservancy and the Free Software Foundation) have long complained that existing Free Software in this area is inadequate, and have been forced to develop customized, one-off solutions in-house to make the systems work.
It's highly unlikely that the for-profit sector will adapt existing Free Software accounting systems to meet the differing needs of NPOs (let alone the more complex needs of fiscal sponsors; based on advice from our auditors and other fiscal sponsors, Conservancy understands that no existing solution — proprietary or Free — meets the requirements of fiscal sponsorship accounting). Fiscal sponsors like Conservancy must track a separate set of books for every project, keeping in mind that a project may leave at any time for another NPO and need to take their books with them. Yet, the books of the entire organization are the aggregate of the books of all these projects, and internally, they need to be presented as a single set of books for those purposes.
Meanwhile, even if an organization is not a fiscal sponsor, non-profit accounting is just different than for-profit accounting, particularly in the USA. For example, for-profit-oriented systems often make problematic assumptions about the workflow of accounting tasks (often because NPOs rely primarily on donations, rather than fee-for-service or widget-selling income). Also, non-profit income is categorized differently than for-profit income, and the reporting requirements vary wildly from their for-profit equivalents.
Conservancy's existing system is working adequately, but requires daily the relatively more expensive time of a highly technical person to do the job of bookkeeping. Also, the system cannot easily be adapted in its current form for another NPO, unless they also have a skilled technical employee to act as bookkeeper. This project aims to build on what Conservancy has learned and produce a non-profit accounting system that corrects these flaws.
Finally, Conservancy's mission (as stated on our Form 1023 with the USA IRS) includes producing Open Source and Free Software. Thus, this project is a great way to pursue Conservancy's mission and address a specific need that so many NPOs (including us) have. If no one steps up to create Free Software to replace the widely used proprietary software, NPOs in aggregate will pay much more money for proprietary licensing than Conservancy will ever spend in developing a replacement. Please donate generously to help us do it!
Statements of Support For This Project from Others
As a national fiscal sponsor with over 3,000 arts and cultural projects
under our umbrella, Fractured Atlas is ecstatic about this effort's
potential. After 15 years wrestling with Quickbooks and other inadequate
options, the idea of an open source tool designed specifically for this niche
of the field is beyond welcome. We wholeheartedly support the Conservancy's
work on this front and look forward to seeing where it leads. —
Huttler, Executive Director, Fractured Atlas
just one of many organizations that would benefit from a Free Software
accounting system that is usable by non-technical people. We
enthusiastically support the Conservancy's campaign to create one, and look
forward to using the result.
Fogel, Executive Director,
As a fiscal sponsor organization with over 30 currently-associated Free
Software projects, Software in the Public Interest shares the Conservancy's
needs and interests in this area, and welcome the opportunity to collaborate
on the development of a Free Software solution to our accounting needs.
— Bdale Garbee, President, Software
in the Public Interest
Open Source accounting software specifically tailored for non-profits
will fill a pretty large need.
— Thad Calabrese,
Assistant Professor of Public and Nonprofit Financial Management
at NYU Wagner, and co-author
of Financial Management for Public, Health, and Not-for-Profit
Organizations, 4th Edition.
Creating free software specifically designed to address the needs of
nonprofits is a laudable goal and one that Conservancy is extremely well
positioned to achieve. — Karen
Director, The GNOME Foundation
The Open Source Initiative has shared the experiences of Software
Freedom Conservancy in navigating the financial management needs of
non-profit organisations and shares their concern. We have many NPOs as
members and we welcome this useful initiative by Conservancy.
— Simon Phipps, President, Open Source
The Free Software Foundation is committed to doing all of its work,
both public-facing and internal, using only free software. We are thankful to
the developers of SQL Ledger for providing the accounting software that has
served us well for many years. As we have grown, so have the complexities of
our finances. Because of our own needs and our mission to help other
organizations — both inside and outside of the technology sphere
— run their operations on exclusively free software, we wholeheartedly
support this Conservancy initiative. — John Sullivan, Executive
Director, Free Software Foundation
Open source is a great way to solve new problems and make software that
is more flexible and responsive to the needs of the people who use it. That's
as true for the finance industry as it is on the web.
As a young free software non-profit, OpenHatch is thrilled to see this
effort; it would let us spend more of our time on programs and less on
paperwork. I have already personally donated. — Asheesh Laroia,
Executive Director, OpenHatch
Some Important Details for this Fundraiser
- Donations made are general donations to the Software Freedom Conservancy, Inc., a 501(c)(3) charity incorporated in New York. Conservancy is committed to doing this work described herein, but cannot promise to complete the work if the fundraising goal is not reached. If the fundraising goal is not reached, Conservancy will do its best to make progress on the plan above with the resources available. It's expected that work will simply proceed, but more slowly and take more time, if the fundraising goal is not reached.
- The license for the project is not yet chosen, since Phase 0 might prescribe contribution to particular upstream projects, and Conservancy is committed to contributing to upstream projects under their chosen license, where possible. However, Conservancy promises that all software that is written will be released under a license that is both approved by the FSF as a Free Software license and by the OSI as an OSI-approved license. New documentation that is written will be released under some license compatible with CC BY-SA 3.0 USA.