Icon Systems Church Software Review

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I had a very pleasant experience recently with the great people over at Icon Systems (the creators of IconCMO church management software). I had the opportunity to interview, through Email, some prominent members of their staff as well as the company president, Bill Gifford.

 
Why this Interview is a Must Read for Anyone Dealing with Church Management and Accounting

  • It gives you a great overview of one of the most popular church management software programs available: IconCMO.
  • It introduces you to the idea of online church management (which is a great way to save money and time).
  • It answers (from a licensed Certified Public Accountant) some of the most common questions I get about church accounting: Are there any special accounting standards our church needs to be following? Can my church lose its tax-exempt status? Are my current accounting reports in compliance with non-profit regulations and standards? Is there a church accounting software program that can help me be in compliance with non-profit standards? My church is small, do I need to worry about the accounting standards?

Sit back, relax, and take the time to read this whole interview. It provides the answers to some of the tough questions church leaders and staff face.

What would you tell those who are just starting out a new church, are on a tight budget, and are feeling overwhelmed by all of the administration and accounting tasks that are required for a church to run?

Leverage Volunteers via Technology

Bill (President) Manage your church: don’t try and run your church.  Find as many volunteers as you can.  This allows you to actually do ministry, not administration.  A flexible web-based ChMS (church management software) product will help to get the most out of your volunteers.
Jay (Sales) A cloud-based (a.k.a. web-based) church software solution can be accessed from anywhere. This means that you and your staff can work on membership, donations, or accounting from anywhere, not just at the office. Volunteers can jump in and work from home as well.

 

Ensure a Return on Investment is Realized

Gene (Marketing) Technology changes every 18 months or less. Buying and updating software and servers can be a very expensive process. Cloud computing enables you to keep up with the latest technology without all of the up-front costs.
Bill Not only do you want to manage the up-front costs, but you should also look for software that gives you a return on investment or ROI. If software can help to cut cost in certain areas, then it pays for itself every year that it is in use. Icon Systems did an excellent blog post about ROI that can help many churches make these tough financial decisions and be good stewards of the resources that were given. The ROI should pay itself back within one year or less for technology investments. If not then the church may be looking at the wrong package because either the price is too much or the organization is not getting enough cost savings from it.

Any Size Church

Bill It’s not just new churches that face these kinds of problems. All churches, from church plants to established churches, single campuses to multi-site organizations, small town congregations to mega-churches, face having more administrative work than time in the day.

What is it that separates IconCMO from the other popular packages out there?

Bill IconCMO provides all the necessities a church needs to productively manage their congregation and finances. It is the only ChMS product built from the ground up for the web that provides a full-featured membership and donations system alongside a full-featured fund-based accounting system.
Jay It is important to us that your church makes the best use of IconCMO possible. That’s why we provide some of the best customer support in the industry. Our support lines are always answered by a live person and you are talking to highly skilled support staff. Our support staff isn’t just friendly—our clients talk directly to people that can solve the issue. While we can’t do your accounting for you, we do have a CPA on staff who can give you some guidance in sticky accounting issues.
Bill Speaking of accounting, IconCMO has a very strong fund accounting software package that was reviewed by an outside CPA firm and was certified for FASB compliance. (We’ll talk more about the FASB guidelines later in this interview.) To our knowledge there is no other package that has gone through this type of external audit for church accounting. 

Fund accounting can be a difficult process without the right software. Many times churches will find themselves using creative methods to keep the funds separate: multiple checkbooks, Excel spreadsheets, or, worse, recording the funds incorrectly under liability or revenue accounts. These are all indications that your current software is a limiting factor in doing proper accounting for your congregation and is not compliant.

Could you send us a screenshot of what you consider to be some of the most useful features in IconCMO? Why is this feature so helpful?

Bill IconCMO doesn’t require creativity to tell you instantly how much money is in any accounting fund. It has all the required reports for FASB guidelines (and more) to help you make decisions based on your allocated resources. 

IconCMO Balance Sheet 

Balance Sheet for The Building Fund

IconCMO Net Assets 

Change in Net Asset Report, Including All Funds

Gene To help keep these accounting fund balances accurate, IconCMO has a seamless link between contributions and fund accounting. When donations are posted, IconCMO will map the money directly into the appropriate accounting funds, checkbook, and revenue accounts, completely eliminating the need for double entry by the accounting bookkeeper. This link is kept intact even after making corrections to the donation records. IconCMO Fund Accounting Software 

 

Jay One big time- and money-saver for many churches is the ability to email donation statements. Rather than printing out paper copies, stuffing and addressing envelopes, and spending money on postage, you can send out donation statements with a few clicks of the mouse, as many times a year as you want! 

With our member self-service feature, your congregation can even access their current giving records at any time during the year and email themselves a statement! Churches have reported when implementing this module their donations increased because their members knew exactly how far ahead or behind they are on their pledges.Icon Systems Individual Contribution Statement

 

One feature that I find particularly impressive about Icon’s software is its ability to help churches be in compliance with necessary accounting standards for nonprofit organizations (FASB 95 and 117). Many of the church leaders and staff I have talked with are very confused about these standards. Could you help shed some light on the matter for those of us who are in the dark? Do all churches need to be in compliance with these standards? Are smaller churches exempt? Could you give us a brief summary of the standards? Finally, could you explain to us how IconCMO will help churches be fully compliant with the standards? Church leaders realize it is their own responsibility to be in compliance, but the more information you can share with us here, the better.

Bill It is understandable that many churches don’t understand the accounting standards—after all, they want to focus on ministering, not on their general ledger! It doesn’t help that fund accounting is significantly different than accounting in the for-profit sector. 

Many churches don’t realize, however, that you can lose your tax-exempt status if you are not keeping your books properly. This applies to all churches of every size.

We believe this is of utmost importance for churches. This is why we’ve had IconCMO reviewed for compliance with the FASB guidelines. One example of how IconCMO keeps a church in compliance is the SFAS No. 117 states that the equity of the funds must be reported as a Net Assets and not in a liability or other areas of the Chart of Accounts. Additionally, this is also why we’ve hired a licensed CPA that can give some guidance to our customers in understanding these differences.

I’ve asked Karla, our CPA, to explain some of the nitty-gritty about the FASB guidelines which IconCMO follows to ensure compliance.

Karla (CPA) Compliance with standards is necessary for any and all churches no matter what the size. The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization that was founded in 1973. The FASB’s job is to create the generally accepted accounting principles (GAAP) for organizations within the U.S. In order to establish accounting principles, the FASB issues pronouncements addressing general or specific accounting issues. These pronouncements are usually issued in the form of Statements of Financial Accounting Standards (SFAS). These standards are recognized as authoritative by the Securities and Exchange Commission (SEC) and by the American Institute of Certified Public Accountants (AICPA). Standards issued by the FASB govern the preparation of financial reports for all nongovernmental entities and as such apply to financial reporting by churches. 

The primary FASB standards that are relevant to churches include:

  • SFAS No. 95 Statement of Cash Flows
  • SFAS No. 116 Accounting for Contributions Received and Contributions Made
  • SFAS No. 117 Financial Statements of Not-for-Profit Organizations
  • SFAS No. 124 Accounting for Certain Investments Held by Not-for-Profit Organizations.

 

While you can find all the details on the www.fasb.org website, referenced by the SFAS number, here’s a summary of what each refers to.
 

  • SFAS No. 95 Statement of Cash Flows established standards for cash flow reporting. The cash flow statement is a separate report included in the financial statements and details the sources and uses of cash for the reporting period. When SFAS No. 95 was originally issued, it did not apply to not-for-profit organizations (i.e. churches). With the release of SFAS No. 117 Financial Statements of Not-for-Profit Organizations, SFAS No. 95 was amended to include not-for-profit organizations. This means that a cash flow statement is a required component of the financial statements for churches effective for fiscal years beginning after December 15, 1995.
  • SFAS No. 116 Accounting for Contributions Received and Contributions Made established standards for reporting contributions. The standard requires that contributions received and made be reported as unrestricted, temporarily restricted, or permanently restricted depending on the restrictions made by the donor. This standard covers all entities that receive or make contributions and as such apply to churches. The effective date for the standard was for fiscal years beginning after December 15, 1995.
  • SFAS No. 117 Financial Statements for Not-for-Profit Organizations established standards for financial statement presentation for not-for-profit organizations. It renames financial statement reports and requires that a complete set of financial statements should include the following:
    • A Statement of Financial Position (formerly called the Balance Sheet)
    • A Statement of Activities (formerly called the Income Statement)
    • A Statement of Cash Flows

Further, the equity (fund balance) portion of the Statement of Financial Position is renamed to net assets. Net Assets should be classified and reported as unrestricted, temporarily restricted, or permanently restricted depending on any donor-imposed restrictions. The effective date for the standard was for fiscal years beginning after December 15, 1995.

  • SFAS No. 124 Accounting for Certain Investments Held by Not-for-Profit Organizations established reporting standards for investments held by not-for-profit organizations. The standard requires that investments in equity securities with readily determinable fair market values and all investments in debt securities be reported at fair market value with gains and losses included in the Statement of Activities. The standard also applies to the reporting of donor-restricted endowment funds. The effective date for the standard was for fiscal years beginning after December 15, 1995.

Non-compliance of the standards can have dire effects on the organization.  A worst case scenario, the church may lose its tax exempt status if the Internal Revenue Service does an examination of the records of the church. The IRS terms church records to mean “all corporate and financial records regularly kept by a church, including corporate minute books and lists of members and contributors.” Please refer to http://www.irs.gov/pub/irs-tege/26usc7611.pdf for detailed information on this topic.

If the church chooses to not follow the standards, the financial statements will not be able to be certified as “in accordance with generally accepted accounting principles”. This could result in members and others to question the integrity of the accounting system as a whole and may negatively impact future contributions by donors.

If the church has a loan with a bank, the bank will usually require financial statements that are in accordance with GAAP. If statements are not prepared in this way, it may cause the church to incur additional expenses to restate the reports in the proper format. If the software system of the church is not equipped to prepare these statements, the church may need to engage outside accountants or CPAs to make the statements in compliance with GAAP.

 

A lot of people are considering QuickBooks for the accounting portion of their church technology. From what I’ve read IconCMO can integrate with QuickBooks, is this still correct? What are your thoughts about using QuickBooks for church accounting? IconCMO has an accounting module as well, do you think it’s a good idea for people to integrate with QuickBooks or to simply use IconCMO’s accounting module?

Bill We highly recommend using IconCMO’s accounting module.  It helps the church keep in compliance and has the ability to generate financial reports for each fund or as a group.  It also allows the church to know the exact break down of the checking account.
Jay With any accounting package a church should always research to see if that package has been reviewed by an outside CPA business consultant to verify that they will be in compliance with the FASB guidelines.
Karla IconCMO is a complete software package that links contributions funds to accounting funds and decreases time and money spent and keeps a church in compliance. When the church has IconCMO why would you want to spend more money on a secondary package?
Bill While we do not recommend QuickBooks  for a church’s accounting needs, many churches still use it. IconCMO does supply an export to Quickbooks option that can be used if necessary.

 

 

Finally, for those considering switching over to IconCMO, when is the best time of year to make the switch (is there a best time)? How difficult is it to transition from their current church management package to IconCMO?

Gene For membership data, we offer a conversion process to transfer data from most existing products into IconCMO.
Jay Because few other packages do proper fund accounting, we don’t import accounting information. Instead, IconCMO uses beginning balances and moves forward from those balances. You’ll want to keep information from your other system available for a time for reference. 

While most churches like to switch at the end of a fiscal year, IconCMO can begin at any time.

Bill Some churches will implement the membership and donation modules first, then implement accounting at the start of their fiscal year. This gives them time to familiarize themselves with the system at a comfortable pace.

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Comments

  1. Lindy Parrish says:

    I used this particular product after growing out of a DOS based program that was no longer upgradeable. The first thing I noticed was the ability to be able to access the Cloud from anywhere I was, at work, home, on vacation; in other words, anywhere in the world that had access to the internet. I was also sold on the fact that there were backups in place in several different secure locations, locked inside a cage inside a locked building that is temperature controlled. Each of these locations had the latest backup of my information. There are so many things I liked about the program that I could go on and on, but the most important was the customer service, which was over the top in every way. I am retired now, but I am willing to give a recommendation to anyone who asks, as I am still used by two churches as a consultant on the program.

    • Hey Lindy,

      Thanks for that great comment. It really adds to the discussion. I agree with you that companies like Icon Systems can take much better care of your data than you can.

  2. The right accounting and budgeting software largely depends on the size of the company (or church, in this case). Spreadsheets can only do so much, and if the business is looking to grow it will need more than that. The best solution is one that also plans for the future.

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