Integrating Finance and Fundraising - Part Two: Alphabet Soup and the Non-profit Transaction...

Alphabet soup: ERP vs Fundraising CRM

The Differences in Fundraising and Finance Software: NetSuite and some of the more popular fundraising CRMs have a lot in common. Both are web-based solutions built natively on internet technology; both can manage revenue; and both tools can be customised by the end-user. It’s precisely because both CRM systems and NetSuite are capable of deep customisation, that many nonprofit decision makers wonder if just one system could do it all.

Each technology has a set of strengths to consider:

Fundraising CRM systems manage the marketing to donations process: prospecting donors; soliciting gifts; setting up fundraising campaigns; tracking campaign response; building donor profiles; segmenting donors for future approaches and, managing the donation lifecycle. CRM systems extend donor stewardship with built-in tools for householding and relationship tracking - the focus is on people. Nonprofit development can span multiple strategies, so fundraising software can handle multi-channel giving, automated segmentation, integrated online donation tools, marketing automation, major donor tracking and beyond.

NetSuite, an Enterprise Resource Planning system (ERP), automates the entire operational side of an organisation, with an emphasis in automating back-end business processes for accounting, finance, budgeting, inventory management, purchasing and payroll.

As an ERP system, NetSuite maintains your organisation’s general ledger. A general ledger contains the Chart of Accounts to record transactions that relate to a nonprofit’s assets, liabilities, revenue and expense. For each contribution and expense there is a debit and a credit created automatically. Fundraising CRM systems only track income, while NetSuite manages both revenue and expenses. On any type of transaction, NetSuite automatically records the general ledger impact for both debits and credits.

Show me the money: The importance of the nonprofit transaction

A revenue transaction for a nonprofit includes a diverse range of contribution types including pledges, pledge payments, event tickets, service fees, product sales, grants, in-kind gifts and memberships. While both fundraisers and finance focus on revenue, their worldviews are different.

From a fundraiser’s point of view, key pieces of information on a gift include:

? Donor

? Strategy to raise money – Campaign, such as “Direct Mail”

? Specific solicitation of a strategy – Appeal, such as “Spring2025”

? Donor intent—what area the donor wishes to give – Fund, such as “Children’s Library”

? The type of gift – Pledge, pledge payment, grant, donation

All fundraising CRM systems track this type of gift information so that fundraisers can steward donors and re-solicit gifts based on donation behavior.

From an accountant’s point of view, compliance is the highest priority. To conform with nonprofit accounting rules, each transaction must be tagged as “unrestricted” or “restricted” with specific accounting treatments and reporting regulations applied to each gift. Restricted contributions must carefully track where donors intend their gift to be spent (Fund/Grant) or by time, such as a pledge or a multi-year donation.

And here is where fundraising and finance agree: both systems must track the type of gift and donor intent. These mutual integration points are defined in the Chart of Accounts. The Chart of Accounts is the primary organising tool used by accounting to segregate expenditures, revenue, assets and liabilities. For fundraising and finance to be in harmony, they must share the appropriate elements of the Chart of Accounts.

Should I Stay or Should I Go? How to Evaluate if You Need an “All in One” or an “As if One” Solution

Wouldn’t it be easier to use an “all-in-one” ERP system that can handle fundraising, finance and even program initiatives? Possibly. Can NetSuite be that system? Yes, NetSuite can handle finance and fundraising operations, with customisation. NetSuite as a nonprofit ERP, focuses on finance. To use NetSuite for fundraising, you must manage all donors and solicitation within NetSuite, which will involve customisations. If you want to use NetSuite as an “all-in-one” fundraising and finance system, we recommend a phased approach starting with finance and then moving to fundraising so that your organisation can absorb the change management required to take advantage of the ERP power of the NetSuite platform.

Alternatively, you can opt for an “as-if-one” approach. Here your development department can maintain their existing fundraising system, but integrate data from fundraising sources into NetSuite. Advantages of an “as-if-one” solution include the ability to maintain the unique capabilities of a fundraising system; unify silos of information by managing all transactional reporting in NetSuite’s ERP; and use of the powerful finance capabilities of NetSuite without additional customisation. These solutions are not mutually exclusive, because with a phased approach to implementation, you can use an “as-if-one” approach in the short term, while you plan for an “all-in-one” system in the future.

In part three of our guide, we will take a look at the 'Building Blocks For a Successful Integration'.