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Non-Profit Accounting Software
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.
31 August 2016: We're beginning work on a system for Payment and Reimbursement Requests. This is a smaller piece of the larger NPO Accounting project. Because it doesn't require much integration with larger accounting systems, we can help address this specific bookkeeping problem for NPOs sooner, and start building interest in the larger NPO Accounting project.
We haven't started writing code yet, so now's a great time to get in on the ground floor! Check the Requirements document we're putting together on the wiki. Join us on the mailing list to let us know what's missing, and hear first other ways you can contribute as we start building the system.
What is the Non-Profit Accounting Software Project?
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.
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.
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.
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, Chief Executive Officer, 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,
Software in the Public Interest is a fiscal sponsor for 44 free and open
source projects. We share many of the accounting needs and challenges of
the Conservancy and are excited to collaborate on a Free Software
solution to these needs and challenges.
— Michael Schultheiss, Treasurer, 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.
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, (former) 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,