Why get a church accounting software when any traditional accounting systems will do? Definitely, somebody will ask this question when a church accounting officer or any church official proposes a change in the accounting system of the church.
Because a church is not profit-oriented as a religious institution, it will benefit much from using an accounting system or software that suits its fund management needs.
Simply put, a non-profit organization like a church is an assembly of people that gives services to others without aiming for profits. Also included in this group are religious organizations and their affiliates such as schools, stores, shelters, clinics, and cemeteries owned by churches. Although a non-profit group can earn profits from its programs or activities, none of its members should enjoy the profits or bear the losses that may arise. Non-profit organizations often accumulate assets from sources that expect no payment in return. As a non-profit oriented organization, the church is exempted from local, federal, and state taxes.
Likewise, any person or group that gives a contribution to the church can use this to pay less tax. More often than not, huge contributions provided to a church specify how the amount must be spent. Allocations of church donations include renovation of church facilities, building new church, missionary work, scholarships, soup kitchen, or any church project or event. For these purposes, a church uses an accounting system to track down its finances properly and accurately.
In the fund accounting system, funds are classified whether they are restricted or unrestricted. Restricted funds are from resources given for a specific purpose as spelled out by the examples given above. Unrestricted funds come from regular offerings, tithes, or donations and can be used for the general administrative and operational costs of the church. In the church’s accounting records, these funds and the disbursement of which must be clearly differentiated from the unrestricted funds and from each other.
Though it would be convenient to open a separate bank account for each fund, it is not required. It also might be more tedious in the long run to keep track of all the bank accounts as projects and donations are added to the list. This is where the need for a church accounting software comes in.
A church accounting software primarily allows easy and convenient accounting of church funds. This software is designed to meet the specific needs of a church’s accounting system. With an accounting software, various church funds are given their own bank account numbers. The accounting software offers an option to maintain individual cash flow entries under each account number of church funds. Apart from that, the accounting software can easily prepare and create reports for every fund. The financial reports can be accessed simply by clicking a button. So one can access and print the reports on some or all the church funds at any given time. That is why an accounting software designed for church accounting systems can be a valuable asset.