Kicking the tires: the correct VAR is only a start. (Nonprofit Software).

These days, getting a box of accounting software and installing it is not as easy as it once was. And, with all of the gyrations of the nonprofit sector, one size does not fit all.

Now enters -- depending on one's point of view -- either a Trojan Horse or a Knight in Shining Armor. It's better known as the Value Added Reseller (VAR). It's often an accounting firm that is licensed to sell and install a particular brand of software.

There is no question that selling and installing nonprofit accounting software is paying off for software vendors. In fact, reselling such software is also filling the coffers of some CPAs who say that the bulk of their revenue now comes from this area alone.

But, that is not your concern, is it? You need to be able to get what you want, not what somebody else "thinks" you should have.

Harold Bower Jr., chief financial officer of the Children's Home in Tampa, Fla., knows both sides of the software purchasing tracks.

During his 20 years in the nonprofit sector he's bought from value added resellers (VARs) and bought directly from software companies.

Choosing between a VAR and buying direct comes down to defining a vision, researching the software and company, and finding a VAR or software company that will provide support when needed at an affordable cost.

"What nonprofits need to do up front is spend a lot of time looking at the company, because you're going to want to buy everything from them you can to get the benefits of the economies of integration," Bower said. "However, you're casting your lot with that firm when you do that. If you go with the wrong company and they experience problems, (such as) they can't keep current technology, you pay an awful price."

VARs are companies licensed to sell, install, establish and support specific software packages. They're one-track nonprofits can rumble on when buying software. VAR consulting fees range from about $75 to $150 an hour. This makes it essential that nonprofits know what they expect from software and the company selling it.

Developing a vision

"That's extremely important," said Bruce Monnery, manager of finance and administration for Renfrew Educational Services in Calgary, Alberta. "I know what I need to give my board. I know what I need to share with my fellow senior management. I know what I need to give the program managers."

With his needs in mind, Monnery has shopped for software based on whether the system will give him the reports he needs and how easy it is to develop them.

"It's not just the general ledger part because all the systems have good databases," Monnery said. "It's how can I get that stuff out of the database quickly, accurately, and without spending my bloody life learning the report writing package."

Tim Connolly, vice president of administration and operations at Historic Annapolis Foundation, Annapolis, Md., said buying software starts with identifying an organization's needs, identifying the software package that will meet them and finding hardware that will run it.

Research

Numerous companies offer nonprofit accounting software. A few are AccuFund, American Fundware, Black-baud, Cougar Mountain Software, FAC's-Financial Analysis of. Charities, Fund E-Z Development, Micro Information Products (MIP), and USI Financials.

Most come with interesting features.

MIP, for example, provides a growth path by offering three product lines with complementary technology, said Dawn Westerberg, a vice president at MIP.

Cougar Mountain Software sells FUND Accounting for Windows, which is fully integrated accounting and financial management software designed exclusively for nonprofit organizations. It conforms to GAAP and reporting for FASB standards 116 and 117.

Picking the right one is time-consuming. A good place to start is researching software packages on the Internet, Bower said. He suggested researching local user groups, calling public accounting firms that audit clients with the software, and talking with actual software users.

"You can find what people think about the software by searching the Internet looking for comments and threads of conversations between users," Bower said. "It is tough to find objective information. The best information comes from users."

Support, making sure the system you buy fits your needs, and ample training opportunities are key points to consider when buying software, especially from a VAR.

"The last thing one needs to do is buy a package and the guys take your money and then too-da-loo you don't see nor hear from them," Monnery said. "Then, when you do need support, you're out in the cold."

Monnery's choice is buying direct from Blackbaud, because he prefers dealing with the company directly and finds Blackbaud's support "top notch."

"It's not cheap. We pay a maintenance fee of 20 percent of the software. But what we pay out in the maintenance fee.... We'd be paying that out to a VAR."

Bower said too often nonprofits invest in software but don't buy the necessary training or consulting services to learn the system.

VAR advantages

Connolly prefers to purchase software from an accounting firm that's also a VAR. Connolly bought MIP's software from Clifton Gunderson, a Peoria, III.-based CPA firm that's one of the largest in the United States.

"Initially, I like to buy the system from a (VAR) because they understand accounting," Connolly said. "They typically have many customers that are in the same boat as I am. They understand finance and accounting, so they would understand my needs both financially and from an information systems perspective," he said.

"Because we do have an accounting background we also can help on a whole range of issues -- not just where to hit enter in the software," said Mickey Scheffki, director of technology consulting for Clifton Gunderson. "We can help them design their systems so it maximizes internal control."

Clifton Gunderson sells MIP and Blackbaud software among others brands.

A close relationship with his VAR insulates Connolly from hardware and software derailments. For example, a recent MIP software release forced the $2 million-budget foundation to upgrade its computer systems. The necessary improvements conflicted with the foundation's email or network system.

Clifton Gunderson helped Connolly decide what hardware trestles to lay. The solution was two personal computers at employees' desks that merged the information.

Being local also gives a VAR an advantage compared to software companies, in Connolly's view. "I think it's a little more personal," Connolly said. "The VAR representative came out and saw my organization. I could sit down and ask them very pointed questions. Does your system support these needs or not?"

Ralph Kubek is president and CEO of alphaSIGMA Consulting, a VAR in Libertyville, Ill. "Usually a value added reseller is closer to the client to provide more care and attention," Kubek said. "A value added reseller is really built around long-term relationships."

A VAR can become involved with a nonprofit's business beyond just installing the software.

"Most value added resellers who have been successful really begin to spend the time and energy to learn the nonprofits' business," Kubek said. "We take a proactive approach of actually helping the client use the software to better be able to control their operations."

Buying direct

Andrew Nolan, controller of Penn-Mar Organization in Maryland Line, Md., chose to buy direct. The decision was luck-laced and spurred by a timely flyer.

Nolan had spent four months defining what accounting software the organization needed to buy. His ensuing research took him to for-profit software programs sold by VARs.

He settled on one that would fit, albeit with significant modifications, and was board-approved to buy it.

A Blackbaud flyer touting their nonprofit accounting software arrived in the mail and changed his mind. He bought direct because he could talk to the makers of the product, which in his opinion, know more about the product than a VAR. Then, he said that he learned the "heck Out of the system."

"Something that I think should be very important to nonprofits is that they can cut out that middle man," Nolan said "They can buy directly from the company and avoid the extra markup."

Bower, who has worked with Blackbaud software since the mid-1980s likes the support he has received from the company. His organization can log support incidents directly into the vendor's support system on the Internet and monitor the progress of cases.

Bower also explained that his software vendor has training options that include "classroom instruction at their home base, on-site, or at sites near us in Florida, and the company's CDROM training also influenced their choice. "We have made extensive use of the CD-ROM training with excellent results."