Netsuite for Nonprofits: Challenges and Best Practices

Nonprofit organizations have unique challenges that the NetSuite for nonprofits ERP and unified add-on integrations can help solve. 

This article explains the challenges that nonprofits face, the features NetSuite ERP provides for nonprofits, and how NetSuite-integrated software add-ons help fundraisers and the accounting team achieve efficient, digital transformation to replace duplicate, time-consuming manual data entry processes with a unified automation system. The article also highlights the NetSuite Social Impact program that donates NetSuite nonprofit software to nonprofit organizations and social enterprises. 

The Unique Challenges Facing Nonprofits

Nonprofits focus on fundraising and building donor relationships to achieve their mission and service goals. Then, traditionally, the accounting department steps in and cleans up after the main event. This means that accounting for donations and grants falls outside the fundraising system and may require entering information into separate systems. 

Non-profits need strong internal controls to ensure that donations actually get to the nonprofit. With mismatched, siloed systems, spreadsheets, and duplicate manual data entry, internal controls may be inadequate to prevent embezzlement perpetrated through fraudulent acts. 

Nonprofit financial reporting requirements are strict and exacting. The accounting process for recording donations and grants and receiving and paying funds gets messy and frustrating. It takes too long. Errors proliferate. 

Paying invoices gets delayed, making suppliers unhappy and adding payment status distractions to the accounts payable staff’s already heavy workload. Employee turnover happens when these factors become unbearable, and the pay isn’t top-notch to compensate for the pain. 

Understanding NetSuite ERP for Nonprofits 

NetSuite provides different cloud software solutions for nonprofits. An overview of these solutions and a description of Oracle NetSuite’s not-for-profit features follow. 

NetSuite understands that nonprofits have specialized needs. NetSuite provides nonprofit solutions for:

• Membership organizations
• International NGOs
• Health and human services organizations 
• Museums and cultural institutions
• Faith-based organizations
• Educational organizations
• Philanthropic organizations

NetSuite Solutions Overview

NetSuite provides a choice of solutions for nonprofit accounting and operations that either sync data with an integrated fundraising system outside NetSuite or allow users to perform fundraising functions within NetSuite. 

NetSuite for nonprofits provides nonprofit-specific features that unify fundraising systems for getting donations and grants (CRMs) with NetSuite ERP back-office accounting and business processes. 

The unified NetSuite nonprofit solution that combines nonprofit accounting within the NetSuite ERP (enterprise resource planning) and fundraising solutions contains six product elements:

• Constituent relationship management (CRM)
• Fundraising
• Finance and Accounting
• Spend Management
• Financial Planning
• Online Ecommerce

Constituent relationship management lets your nonprofit employees create and track relationships between individuals and organizations and between individuals. 

Financial planning in NetSuite Social Impact includes planning, budgeting, and forecasting tools. 

For revenue, features include NetSuite grant management and donations management. 

The NetSuite not-for-profit customers’ ERP system is designed for and used by nonprofits in a single system. NetSuite SuiteSuccess for nonprofits is preconfigured for the core processes and features your organization needs in the nonprofit sector, including a document management system. 

NetSuite for Nonprofits Pricing

NetSuite nonprofit pricing for this system is available from the NetSuite sales department, which will provide a fixed-fee quote for your customized software product. Your nonprofit organization or social enterprise may qualify to receive donated nonprofit software or software discounts instead under the NetSuite Social Impact program. 

When obtaining a software quote, let NetSuite know whether your nonprofit is planning to initially use a comprehensive NetSuite fundraising and finance system or maintain its current fundraising system with the possibility of later adding NetSuite fundraising operations to NetSuite finance capabilities. 

NetSuite Social Impact 

The Oracle NetSuite Social Impact program helps nonprofits and social enterprises in many ways, including with a NetSuite product discount or base donation under its Suite Donation, Suite Pro Bono, and nonprofits training initiatives.

According to NetSuite, its leading practices for Social Impact are:

Since 2007, NetSuite Social Impact has partnered with organizations of all sizes worldwide in accelerating their missions. We serve these organizations with cloud technology donations, product discounts, pro bono services, and capacity-building workshops.

Tracking Revenue Transactions

NetSuite for nonprofit organizations tracks revenue, including gifts for donation pledges and pledge payments, grants, and other revenue sources. NetSuite classifies them in accordance with generally accepted accounting principles (GAAP) issued by the Financial Accounting Standards Board (FASB). 

GAAP for nonprofit organizations requires classifying these revenue transactions for donations and grants as unrestricted or restricted, tracking donor intent, and applying different GAAP accounting requirements for each type. 

Donor intent is needed for nonprofit GAAP compliance. Donor intent can be by a specific purpose, like a fund identification for use, or instead by time and status, like a pledge or a grant spanning several years. When NetSuite and your fundraising CRM are integrated, donations or grants and donor intent can be synced with NetSuite (using mapped fields), eliminating the need to make entries separately in each system. 

General Ledger (GL) Custom Segments

NetSuite for nonprofits gives you a simplified chart of accounts with dimensions that it calls GL custom segments. Besides offering simplicity in account coding to general ledger accounts, this dimensionality gives you better fund accounting, financial reporting, and analytics.

Besides providing 12 pre-defined GL segments, your nonprofit can also create customized segments that fit its specific needs.  

According to NetSuite:

Custom segments allow you to restrict funds based on time or donor intent, classify revenue streams, track functional expense categories, designate funds to a specific program, and beyond.

Accounting Processes and Financial Statement Preparation

With NetSuite ERP, you’ll have a core accounting system that lets you perform cash management, track receivables and basic accounts payable, update the general ledger, and prepare real-time, transparent non-profit financial statements for internal and external stakeholders. NetSuite nonprofit SuiteSuccess provides more than 250 FASB-compliant standard and customized reports. The core accounts payable functionality includes NetSuite workflow for invoice approval. 

NetSuite has a SuiteApp for Indirect Cost Allocation for Grants that allows nonprofits to recover the indirect costs they incur from grants provided in their agreements. 

NetSuite OneWorld 

Your nonprofit organization can integrate the NetSuite module OneWorld to add global, multicurrency solutions for its domestic and international operations in many geographic locations. 

Dashboards, Metrics, and KPIs

NetSuite gives your non-profit organization’s teams role-based views with real-time visibility to track important metrics and KPIs for better decision-making. These dashboards and KPIs are designed for non-profit employees, including executives.

Scale Your Nonprofit Seamlessly with NetSuite Integration Add-ons

NetSuite ERP can fix some but not all of the problems facing nonprofits. It’s a start on which to build. Third-party add-ons with NetSuite integration add automation for efficiency, error reduction, and financial controls. Seamless integration of this cloud-based software with a nonprofit NetSuite ERP solution and NetSuite global multi-entity OneWorld eliminates the need for manual data entry and handling and storing paper-based documents.

Adding third-party AP automation software integration fills the capabilities gap for efficient automated invoice processing to pay global suppliers with invoice credit terms. 

Award-winning Tipalti AP Automation Software Add-ons

We recommend integrating and using Tipalti’s cloud-based, advanced AP automation add-on features to enhance NetSuite OneWorld. Tipalti AP automation software is Built for Netsuite and the winner of NetSuite SuiteApp of the Year award in 2019. NetSuite + Tipalti enhances your payables process. 

Tipalti Multi-Entity and Multi-Currency Features

When your nonprofit uses NetSuite OneWorld, Tipalti AP automation automates multi-entity accounts payable with combined entity views, letting you accomplish automated invoice processing and global payments for a large volume of complex supplier invoices received by your nonprofit.

Self-Service Supplier Onboarding 

Self-service supplier onboarding works through a white-branded supplier portal included in the Tipalti AP automation platform. Suppliers must provide their W-9 or W-8 form data before your nonprofit makes their first payment. This early tax form collection eliminates follow-up tasks later when 1099s are due. 

Through the supplier portal during onboarding, suppliers can choose their preferred payment method. Tipalti validates suppliers (or rejects them) using the IRS TIN database to reduce fraudulent invoice payment risk and tracks supplier payments.  

Supplier Invoice Data Capture and Invoice Processing

Tipalti AP automation lets your suppliers or vendors email invoices to the system instead of making you manually input invoices into NetSuite. If they choose, your suppliers can upload invoices through the portal. Tipalti uses AI-driven OCR technology to capture invoice line items and headers. It performs 3-way or 2-way matching of invoices with purchase orders (POs) and receiving reports to verify items ordered and received before making payments. 

Within its automated invoice processing capabilities, Tipalti applies 26,000+ payment rules to flag potential payment errors and duplicate invoices received. Tipalti also automates global regulatory compliance. Tipalti provides automated general ledger account coding.

Invoice Approvals and Payments

Invoice payment approval routing is very advanced. You schedule large batches of invoices to be paid and see real-time cash requirements for batches. Tipalti AP automation automatically reconciles batch payments using different payment methods and currencies to the NetSuite general ledger in real-time.  

Tipalti lets your nonprofit make payments in the supplier’s selected payment method to over 196 countries and 120 local currencies. Tipalti holds money transfer licenses and makes payments through major banks. Tipalti also offers advanced FX software products working with its AP automation product that lets your non-profit organization use a centralized global virtual payment account (Multi-FX) and hedge accounts payable transactions (FX Hedging). 

Real-time Business Intelligence and Dashboards

With Tipalti AP automation, NetSuite nonprofit users will gain real-time dashboards with metrics, AI-driven business intelligence queries through Tipalti Pi, and spend analytics for better spend management. 

Why Nonprofits Need to Embrace Digital Transformation

Nonprofits need to embrace digital transformation to keep their employees motivated, efficiently meet GAAP requirements with improved accuracy, save time and money through streamlined workflow automation without duplication, and decrease future hiring needs. 

Digital transformation offers scalability for organizational growth, meeting added complexity with multi-entity or geographic expansion. Cloud-based solutions let you easily accomplish nonprofit tasks from anywhere. Third-party digital transformation solutions are available for non-profit NetSuite OneWorld and NetSuite’s nonprofit software users. 

These efficient, digital automation solutions streamline business processes and include add-on nonprofit AP automation, advanced FX, and global mass payment automation solutions from Tipalti. The Tipalti add-on automation software provides multi-entity, automated accounts payable invoice processing, including electronic global payments. You’ll get real-time visibility into accounts payable and payout spending trends by each entity and with a combined entity view. 

Digitization helps executives, the CFO and other financial management, accounts payable, and accounting teams work towards reaching their goals with less time-wasting manual tasks. Your nonprofit organization gains financial controls and transparency for meeting its fiduciary responsibility to donors and grant-providing institutions or foundations. To get started with Tipalti’s NetSuite integration for your nonprofit, request a demo.