ubuntu-ngo team mailing list archive

[Alan Bell <alan.bell@xxxxxxxxxxxxxxxxxxxxxxxxx>]

Hi folks,

There was a bit of a discussion on the IRC channel yesterday about
accountancy software for NGOs/charitable organisations sparked off from
Laura Czajkowski's NGO interview where Quickbooks was listed as a piece
of proprietary software tying them to a proprietary platform. Here is
the edited (snipped irrelevance, moved to a more readable order) IRC
transcript:

19:05 < AlanBell> hi jimcooncat
19:05 < AlanBell> there are nice Free accounting tools out there
19:06 < AlanBell> for my small business GNUcash is perfect
19:06 < AlanBell> for a big enterprise there are a collection of good
ERP systems
19:06 < AlanBell> openERP
19:06 < AlanBell> Compierer, OpenBravo, Adampiere and probably others
19:06 < czajkowski> AlanBell: yup payroll flagged again this evening as
an issue
19:06 < jimcooncat> it is for a new business. transitioning over from
another package is tough though
19:07 < AlanBell> yes transitioning is hard
19:07 < AlanBell> do it at a year end, close the books in one system and
open the next year in the new one
19:07 < jimcooncat> AlanBell: I know the procedure well.
19:08 < AlanBell> but that doesn't help with stock, customer data, bill
of materials etc so there is plenty to do for a transition
19:09 < AlanBell> not sure what the specific issues an NGO or third
sector organisation would have with accounting
19:10 < jimcooncat> fund accounting can be difficult if you don't have
that explicitly supported in the software
19:11 < jimcooncat> you have to keep track of balances of funds that are
restricted to certain uses
19:11 < AlanBell> ringfenced stuff
19:11 < jimcooncat> "third sector", "ringfenced" -- so much jargon.
19:12 < AlanBell> I am a bit surprised that fund accounting is different
to cost centres/profit centres in a business
19:13 < jimcooncat> It's not -- but Quickbooks is terrible at doing
balances for those
19:14 < AlanBell> ah ok
19:14 < AlanBell> GNUcash doesn't have a template set of accounts for a
fund accounting type organisation, but I think it should do, and it
wouldn't be hard
19:15 < AlanBell> that would help organisations where there is one
person who does the bookkeeping
19:17 < jimcooncat> Some simple organizations use asset sub-accounts,
which works until they split their funds into separate bank accounts.
19:18 < AlanBell> what size organisation are we talking about here?
19:19 < jimcooncat> In USA, before the financial crisis, once an
organization had more than $100,000 they needed a second bank account.
19:19 < jimcooncat> At the moment, it's $250,000 -- so that's not so bad
19:21 < AlanBell> how many people would touch the accounts?
19:23 < jimcooncat> you need at least two with access to the accounts
(in case one becomes unavailable). But you should have all transactions
going through one central place. Is that what you meant?
19:25 < AlanBell> that sounds fine for GNUcash, it doesn't have great
support for multiple simultaneous users (unless you use a specific
version with a postgres backend that nobody is maintaining last time I
looked)
19:26 < jimcooncat> old-style accounting never had simultaneous users
anyway -- they'd split the books up like a sales journal, payables
journal, etc.
19:27 < AlanBell> hmm, so I think with a bit of research and a friendly
NGO it would be possible to do a great howto for such organisations and
develop an exemplar chart of accounts to go into GNUcash as one of the
templates available


So with that there is the germ of an idea.
GNUCash is a double entry accounting package. I use it to run two UK VAT
registered small businesses and it works great for me. It supports a
huge list of currencies and a chart of accounts can run with mixed
currencies. It is a single user system which limits the size of
organisation a bit (multi-user is on the roadmap but I am not sure
if/when that would happen) but vast numbers of NGOs/charities are small
enough that one person has the primary responsibility for bookkeeping.
GNUCash out of the box on Ubuntu has a bunch of template account
hierarchies, for example "A Simple Checkbook" "Homeowner Expenses"
"Business Accounts" "UK VAT Accounts" etc. There isn't really one
designed for the needs of a charity. You can set up the accounts any way
you like, the templates are just a starting point so you could today use
GNUcash for any business. It would be great to say that with Ubuntu you
have an accounting package with a pre-configured template to get a
charity up and running.

Now from a bit of research it turns out that there are very different
requirements for NGOs depending on what jurisdiction they are in. In
America there are federal requirements for Fund Accounting
http://en.wikipedia.org/wiki/Fund_Accounting
in the UK there are two different ways, Receipts and Payments for
smaller organisations
http://www.charity-commission.gov.uk/publications/cc16.asp and Accruals
for those over a threshold
http://www.charity-commission.gov.uk/publications/cc17.asp and no doubt
those charities domiciled in other countries will have different
standards to meet.

Now what I think we could usefully do is to find a charity that is
"usefully typical" in that they are not doing anything weird financially
(such as providing micro-finance loans) and are in a jurisdiction where
their problems would be shared by lots of other organisations who would
benefit from Software Freedom. If they will open the books and talk to
us about what they need in an accounting package so we can build a chart
of accounts that works for them, and generically for organisations like
them I think this would be a great reason for people to switch to
GNUcash on any platform, preferably Ubuntu.

As a project this isn't programming, and it isn't particularly hard. You
don't need to be an accountant (I am not) but it would be great if an
accountant could check it.

What do you think?

Alan.