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Conservancy's Fundraising Campaign For Non-Profit Accounting Software

Fundraising Campaign: Non-Profit Accounting Software

Summary

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Software Freedom Conservancy is a not-for-profit organization that - helps promote, improve, develop, and defend Free, Libre, and Open Source - Software (FLOSS) projects. Conservancy provides a non-profit home and - infrastructure for FLOSS projects. This allows FLOSS developers to - focus on what they do best — writing and improving FLOSS for the - general public — while Conservancy takes care of the projects' needs that - do not relate directly to software development and documentation.

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Please help all non-profit organizations (NPOs) by donating to Conservancy +to begin creating an Open Source and Free Software accounting system usable by non-technical bookkeepers, +accountants, and non-profit managers.

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To keep books and produce annual government filings, NPOs must +maintain complicated home grown systems. Most use proprietary +software, paying exorbitant licensing fees — fundamentally at cross purposes with their underlying missions of +charity, equality, democracy, and sharing.

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You can help Conservancy fix this problem by donating now. We seek to +raise $75,000 to employ a +developer one year to make substantial progress on this project.

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If successful, this project will save the non-profit sector many +millions every year in licensing fees. Even non-profits that continue to use proprietary accounting +software will benefit, since the existence of quality Open Source and Free + Software for a particular task curtails predatory behavior by proprietary + software companies, and creates a new standard of comparison.

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But, more powerfully, this project's realization +will increase the agility and collaborative potential +for the non-profit sector — a boon to funders, boards, employees, and the +populations they serve — bringing the Free Software and general NPO communities +into closer collaboration and understanding.

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Thanks in advance for helping us develop Free Software to benefit all +non-profit organizations, and thus all of society.

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Donors of $500 or more will be acknowledged in the THANKS file and other + appropriate places in the codebase itself.

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Endorsers of this effort include Fractured Atlas, Free Software +Foundation, Mozilla Foundation, GNOME Foundation, OpenHatch, Open +Source Initiative, QuestionCopyright.org, and Software in the Public +Interest; all encourage you to donate and support it.

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Background

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Like many non-profit organizations (NPOs) in the USA, Conservancy's + financial accounts are audited annually by an independent accounting firm; + we recently completed our fiscal year 2011 audit. As usual, our auditors + asked plenty of questions about our accounting software. Conservancy uses + only Free Software, of course, using a series of straightforward reporting + scripts that we created to run on top + of Ledger CLI. (Conservancy's + current configuration using Ledger CLI + is publicly + documented and explained).

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Our auditors were only familiar with proprietary accounting systems, and + our system seemed foreign to them (since it relies on Ledger CLI's text files, Emacs and + version control). During their questions + about our setup, we asked them to hypothetically prescribe a specific + proprietary software setup as a model for how to manage Conservancy's + accounts. Our chief auditor started by mentioning a few well-known + proprietary solutions — but, then he paused and continued — Given + that Conservancy's a fiscal sponsor with so many temporarily restricted + accounts, existing systems really wouldn't do that good of a job for + you.

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Indeed, Conservancy reached out into the broader fiscal sponsorship + community beyond the FLOSS + NPO community and discovered that many larger fiscal sponsors — even + those willing to use proprietary components — have cobbled together + their own unique systems, idiosyncratically tailored to their specific + environments. Thus, good, well-designed, and reusable accounting software + for non-profit fiscal sponsorship is not just missing in the software + freedom community; it's missing altogether.

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The project that Conservancy proposes to undertake below is a modest step + forward to begin creating a better solution for everyone, and + many NPO leaders and academics agree with Conservancy about the + immediate need for work to begin on this + effort. Fractured Atlas, Free Software + Foundation, The Mozilla +Foundation, The GNOME Foundation, OpenHatch, Open Source Initiative, + QuestionCopyright.org, and Software in the Public Interest have + all endorsed Conservancy's plan herein, and they encourage you to donate and + support it.

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Conservancy is uniquely qualified to undertake this task. Using only Free + Software, Conservancy already meets the complex accounting challenges of + earmarked, directed donations for over thirty different projects. We've + learned much about this work in our first seven years of + operation, and we're prepared to apply what we've learned to solve + this problem not just for ourselves, but for anyone who seeks a + solution that both respects software freedom and handles non-profit + accounting for all sorts of NPOs, including fiscal sponsors. General NPO + accounting is just a “base case” of fiscal sponsorship (i.e., + an NPO is just a fiscal sponsor for one and only one specific project), + and Conservancy therefore believes a solution that handles fiscal sponsors + will also handle the simpler case as well.

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The Plan

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Conservancy proposes to hire a software developer for one year to + accomplish the first two phases of this project. Conservancy seeks to + raise $75,000 toward this project to help cover salary and benefits for a + full-time staffer to work on this project. We ask that you give generously + via the donation buttons on this page to support our work.

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Phase 0

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Some Free Software accounting systems do exist. A previous informal + survey of these systems that Conservancy conducted in 2007 led us to the + conclusion that, in general, these systems were heavily geared toward + for-profit endeavors, and ignored the unique needs of NPOs generally, and + were completely hopeless for the specific needs of a fiscal sponsoring + organization. Conservancy's assessment at the time was that these + challenges could be addressed only with a large rewrite of one of these + systems. Conservancy chose + Ledger CLI precisely because + it provided flexibility and configurability not present in any other Free Software + double-entry accounting system.

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However, while that previous informal survey informs Conservancy's + existing hypothesis that Ledger CLI is the right base system here, + Conservancy will first test that hypothesis. The first phase of this + project (estimated to last approximately 6-8 full-time weeks) will produce + a written survey of all known Free Software accounting systems, and + indicate what challenges exist to adapt such systems for the needs of + NPOs. The Free Software Foundation has + pledged their help in the evaluation of SQL-Ledger, + and the GNOME Foundation has pledged their + help in the evaluation of GNUcash (which they + currently use, respectively).

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Phase 1

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Phase 1 of the project will select the preferred codebase from Phase 0, + and improve that system to create a basic accounting system for + small-to-medium sized USA NPOs (i.e., Form 990-filers) — including fiscal + sponsors — with the following features: +

Basic accounts payable/receivable (with invoicing)
Tracking and reporting of non-profit income types (related business + income, unrelated business taxable income, donations, etc.)
Basic backup documentation tracking for expenses and payments
Basic bank statement reconciliation reporting
Basic annual audit preparation reporting + (a prototype + of this portion is already complete and has been relied on for + real-life audits; but the prototype is just a hack and needs to be + rewritten)
Ability to easily handle all these features on a project-by-project + subset of the accounts, and to easily export and excise that subset from + the system. (i.e., support for temporarily restricted assets, earmarked for + fiscal-sponsored projects)
Multi-currency support and reporting

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We will consider the first year of this project successful only if all these + functions can be performed by a bookkeeper who is generally qualified as a + bookkeeper, but not necessarily familiar with standard Free Software tools + such as GNU/Linux, Emacs, version control, and command line scripts. This + requirement is essential: Conservancy's existing system using Ledger CLI + already provides sufficient functionality to manage non-profit accounting, + but our system requires a bookkeeper who is also adept with the + aforementioned tools already.

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Finally, while the first year of work focuses on USA NPO needs, + Conservancy seeks to lead an international effort, and welcomes + contributions and input from everyone in the non-profit community from + around the world. Conservancy has created + a mailing + list for discussion of this project and encourages interested parties + from around the world to join the mailing list and contribute to the + project!

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Why Conservancy Must Fund This Work

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As it stands, nearly all Open Source and Free Software NPOs either use + proprietary software, or fully outsource their bookkeeping and accounting + to third-parties. Those that don't do so (such as Conservancy and the Free + Software Foundation) have long complained that existing Free Software in + this area is inadequate, and have been forced to develop customized, + one-off solutions in-house to make the systems work.

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It's highly unlikely that the for-profit sector will adapt existing Free + Software accounting systems to meet the differing needs of NPOs (let alone + the more complex needs of fiscal sponsors; based on + advice from our auditors and other fiscal sponsors, Conservancy understands that no existing + solution — proprietary or Free — meets the requirements of fiscal sponsorship accounting). Fiscal sponsors like + Conservancy must track a separate set of books for every project, keeping + in mind that a project may leave at any time to another NPO and need to take + their books with them. Yet, the books of the entire organization are the + aggregate of the books of all these projects, and internally, they need to + be presented as a single set of books for those purposes.

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Meanwhile, even if an organization is not a fiscal sponsor, non-profit + accounting is just different than for-profit accounting, particularly in + the USA. For example, for-profit-oriented systems often make problematic + assumptions about the workflow of accounting tasks (often because NPOs + rely primarily on donations, rather than fee-for-service or widget-selling + income). Also, non-profit income is categorized differently than + for-profit income, and the reporting requirements vary wildly from their + for-profit equivalents.

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Conservancy's existing system is working adequately, but requires daily + the relatively more expensive time of a highly technical person to do the + job of bookkeeping. Also, the system cannot easily be adapted in its + current form for another NPO, unless they also have the staff time of a + skilled technical person to act as bookkeeper. This project aims to build + on what Conservancy has learned and produce a non-profit accounting system + that corrects these flaws.

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Finally, Conservancy's mission (as stated +on our Form +1023 with the USA IRS) includes producing Open Source and Free Software. +Thus, this project is a great way to meet Conservancy's mission and address a +specific need that so many NPOs (including us) have. If no one steps up to create Free Software to replace the widely used +proprietary software, NPOs in aggregate will pay much more money for +proprietary licensing than Conservancy will ever spend in developing a +replacement. Please donate +generously to help us do it!

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Statements of Support For This Project from Others

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As a national fiscal sponsor with over 3,000 arts and cultural projects +under our umbrella, Fractured Atlas is ecstatic about this effort's +potential. After 15 years wrestling with Quickbooks and other inadequate +options, the idea of an open source tool designed specifically for this niche +of the field is beyond welcome. We wholeheartedly support the Conservancy's +work on this front and look forward to seeing where it leads. — +Adam + Huttler, Executive Director, Fractured Atlas

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QuestionCopyright.org is +just one of many organizations that would benefit from a Free Software +accounting system that is useable by non-technical people. We +enthusiastically support the Conservancy's campaign to create one, and look +forward to using the result. +— Karl +Fogel, Executive Director, + QuestionCopyright.org

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As a fiscal sponsor organization with over 30 currently-associated Free +Software projects, Software in the Public Interest shares the Conservancy's +needs and interests in this area, and welcome the opportunity to collaborate +on the development of a Free Software solution to our accounting needs. +— Bdale Garbee, President, Software + in the Public Interest

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Open Source accounting software specifically tailored for non-profits + will fill a pretty large need. + — Thad Calabrese, + Assistant Professor of Public and Nonprofit Financial Management + at NYU Wagner, and co-author + of Financial Management for Public, Health, and Not-for-Profit + Organizations, 4th Edition.

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Creating free software specifically designed to address the needs of +nonprofits is a laudable goal and one that Conservancy is extremely well +positioned to achieve. — Karen +Sandler, Executive +Director, The GNOME Foundation

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The Open Source Initiative has shared the experiences of Software + Freedom Conservancy in navigating the financial management needs of + non-profit organisations and shares their concern. We have many NPOs as + members and we welcome this useful initiative by Conservancy. + — Simon Phipps, Open Source + Initiative

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The Free Software Foundation is committed to doing all of its work, +both public-facing and internal, using only free software. We are thankful to +the developers of SQL Ledger for providing the accounting software that has +served us well for many years. As we have grown, so have the complexities of +our finances. Because of our own needs and our mission to help other +organizations — both inside and outside of the technology sphere +— run their operations on exclusively free software, we wholeheartedly +support this Conservancy initiative. — John Sullivan, Executive +Director, Free Software Foundation

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Open source is a great way to solve new problems and make software that +is more flexible and responsive to the needs of the people who use it. That's +as true for the finance industry as it is on the web. +— Mark +Surman, Executive +Director, Mozilla +Foundation

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As a young free software non-profit, OpenHatch is thrilled to see this +effort; it would let us spend more of our time on programs and less on +paperwork. I have already personally donated. — Asheesh Laroia, +Executive Director, OpenHatch.

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Some Important Details for this Fundraiser

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Donations made are general donations to the Software Freedom + Conservancy, Inc., a 501(c)(3) charity incorporated in New York. + Conservancy is committed to doing this work described herein, but cannot + promise to complete the work if the fundraising goal is not reached. If + the fundraising goal is not reached, Conservancy will do its best to make + progress on the plan above with the resources available. It's expected + that work will simply proceed, but more slowly and take more time, if the + fundraising goal is not reached.
The license for the project is not yet chosen, since Phase 0 might + prescribe contribution to particular upstream projects, and Conservancy is + committed to contributing to upstream projects under their chosen license, + where possible. However, Conservancy promises that all software that is + written will be released under a license that is both approved by + the FSF as a Free + Software license and by the OSI as + an OSI-approved license. New + documentation that is written will be released under some license + compatible with CC BY-SA 3.0 USA.