Funding management software is an all encompassing platform that assists nonprofits in the process of managing funds that come in and out of the organization on different programs, and different time lines. Funding management software provides your organization with the much-needed systematic way of allocating funds and also analyzing expenditures.
In practical terms, it bridges the financial reality of funding with the operational reality of programs. These include visibility into the questions that nonprofits are faced with every day, such as what programs are full, where restricted funds may be spent, how close a project is to its budget limits, and what reports are due.
Funding Management Software versus Grant Management Software
Both these terms are used interchangeably; however, normally they solve different issues.
The funding management software will concentrate on the entire mix of money or expenses that the organization gets. This software will be developed to help in budgeting, allocating, or even forecasting.
Grant management software is designed around the grant cycle, such as application intake, review, grant tracking, compliance, reporting, and outcome measurement for a particular relationship involving the funder. It is built for the specifics related to institutional grant funding.
In many nonprofits, the funding management software helps you manage the big picture, and then the grant management software helps manage the details associated with the grants.
How They Both Keep Track of Grants
For most non-for-profit organizations, grants are considered the most complicated way of dealing with funds because they come with various conditions and deadlines. There is software that deals with the management of funds and other software that deals specifically with grants.
Funding management software is used to track grants within financial planning. It assists financial managers with managing restricted funds, tracking expenses to budgets, anticipating cash flow, and minimizing financial risk with programs drawing funds from separate funding sources.
The grant management system helps to manage grants from an operations or compliance perspective. It helps to capture grant details, reporting requirements, deliverables, documents, outcomes, or communication requirements to comply with grants.
When both systems are integrated, nonprofits see the entire lifecycle of grant money from award to impact without losing any data precision among teams.
Benefits of Funding Management Software
Fundraising management software improves the operations of nonprofit organizations since it helps prevent processes from being disorganized. This is usually reflected in the short-term.
- Less manual work and fewer errors: Use centralized fund data to eliminate version control in spreadsheets and manual reconciliation, which means less time spent tracking numbers and fixing errors.
- Better control of spending: Compare spending to budget in real time, detect potential overspending issues early, and keep program teams informed of actual spending levels.
- Better management of restricted funds: Strictly track the difference between restricted and unrestricted funds and improve the ease of documentation of intended use.
- Faster and more reliable reporting: Provide financial updates to management, boards, or funding sources with automated financial reporting rather than reassembling financial statements cycle by cycle.
- Increased accountability and audit readiness: Keep records, approval processes, and monitoring in order so that audits do not have such a great impact.
The ROI usually comes from fewer fire drills, fewer risk issues related to compliance, and from having more time to devote to the delivery of the mission as opposed to just cleaning up.
Benefits to Nonprofits
For example, a nonprofit might be running three major programs: a youth program, a community health program, and a workforce development program. These programs might all be funded through a combination of restricted grants, contracts from the local government, and private donations. The finance team might be using spreadsheets to track the budget, the development team might be using email chains to track grant deadlines, and the programs might be using reporting documents.
Budgeting software helps by enabling an organization “to allocate funds by program in one place, track spending in real-time, and predict what’s next.” Rather than being notified of the problem after the fact, “teams can identify trouble before it worsens,” such as money being misallocated in restricted dollars or a program spending their dollars too quickly.”
On the other hand, grant management software helps to manage the grant-specific side of things, from reporting requirements to results and other grant requirements. Thus, with grant management software, a nonprofit organization is able to operate its programs with clarity, remain compliant, and accurately report.
The ROI Of Funding Management Software
When speaking of the nonprofit software ROI, the savings are more than just cutbacks—the risk reduction, capacity, and ability to obtain funding are also involved. There are a few key areas a funding management software will pay off.
The biggest gain involves staff time. With fewer efforts spent on rebuilding reports, reconciling numbers, and searching for documents, that time can now be spent on fundraising, program implementation, and building relations with donors and funders.
Another significant area of return is related to compliance and audit readiness. The easier the fund tracking, documentation, and reporting processes, the less likely there is to be an issue related to missed deadlines, disallowed expenses, and audit issues that could impact future funding.
This is because decision-making is heightened since the leadership now has accurate information. When the funding health, program expenditure, and holes are visible, the organization adjusts accordingly and avoids hurtful surprises.
Finally, funder confidence is also enhanced through timely and consistent reporting. Outcomes need also to be clearly linked to the spend.
How Fluxx Delivers ROI & Performance
What Fluxx does for nonprofits is make funding complexities measurable and understandable. This is achieved by having all the activities related to grants in one place and making it simpler to report outcomes for every dollar spent.
Instead of making assumptions about ROI as if it were an idea and not a concrete goal, not-for-profits can start using Fluxx and provide hard evidence of maximizing returns on investment in terms of a shorter reporting cycle time, fewer compliance issues identified, more understandable audit trails, and better visibility into grants and programs.
When your nonprofit has to prove to grantors that funds were allocated correctly and led to outcomes, Fluxx provides you with the tools to prove this with hard data.
Build a Funding Operation That Scales
Funding management software does more for nonprofits than just money tracking, it helps them make better decisions. Funding management software streamlines the management of all types of funding, adding transparency to grant management. Together with grant management software, it gives nonprofits a comprehensive view of grant funding, from award to impact.
Ready to see this in action? Schedule a demo to discuss how Fluxx helps nonprofits with grant tracking, reporting, and more. In fact, Fluxx will help your team demonstrate the ROI to impress even the toughest grant reviewers.
