Are ERP Systems Expensive for Nonprofits?
By implementing the right Enterprise Resource Planning (ERP) system, nonprofit organizations can stop trying to navigate data management and instead focus their employees and other valuable resources on driving their mission. While the term Enterprise Resource Planning is all encompassing, nonprofits of all sizes can take advantage of a scalable ERP system that is designed to accommodate the requirements of nonprofit organizations.
Every nonprofit needs employees, data points, and a financial system to be able to run the operation and deliver the mission. For example, a health and human services organization’s mission is to provide community based services. To be able to deliver its services, at a minimum, its funding and revenue sources need to be tracked and reported against with accurate allocations while making sure that all the spending is controlled by tracking budget against actual. For an association, add to the list the need to track memberships and dues collection as well as a CRM system capable of providing the constituent management and marketing capabilities that tie the revenue it generates back in to the General Ledger.
These needs could be taken care of efficiently by deploying a comprehensive financial management system that is typically referred to as an ERP. The goal of ERP is to replace as many the disparate products and data silos as possible while providing a central system of record for all financial data to be captured natively and through intelligent integrations.
But the question remains, are ERP systems expensive for nonprofits?
The answer: ERP system require a substantial investment, yes, but when you consider the tangible and intangible ROI, they're worth it. The lack of a profit motive does not mean a non-profit organization can afford to be less focused on its finances. In fact, with scarce resources, efficiency in allocation becomes even more important. The allocation of funds and subsequently reporting on operating expenses, salaries and short and long term project funding all require complex reporting. The manual workload to produce these reports is frequently very high which absorbs significant time and resources. The return on investment of ERP for non-profits centers around delivering accurate and easily generated reports. This frees up substantial administrative time that can then be allocated more productively elsewhere.
ERP systems provide both tangible and intangible cost savings that help every dollar go further for not-for-profit organization’s mission. Funds are managed easily to ensure that the organization is adhering to reporting guidelines while tracking several different funds for various projects or contracts and reduce human error and intervention in data management. With a grant management feature, productivity and time savings will increase to the point which the nonprofit can afford to hire a dedicated grants manager or grant writer which in turn increases the chance to receive more grant funding in the future.
Reporting is one of the ways a nonprofit proves its worth to the board and its funders. Many of these reports are complex and take days and weeks of preparation before they can be presented in a way that a board member or member of the public could understand. The time savings on this need alone is typically worth the cost of deploying an ERP system.
If you’re considering implementing an ERP system for your organization, but aren’t sure where to start, or which ERP system will best meet your needs, our experts our standing by and ready to help! GET IN TOUCH >>
BroadPoint is Gold-Certified Microsoft ERP partner with nearly two decades of experience successfully implementing and optimizing ERP systems for organizations of all shapes and sizes across the United States.