Nonprofit Accounting Services to Build Stronger Nonprofits

However, it also offers a few nonstandard features such as volunteer tracking and board management. Instead of identifying these assets with the intention of distributing them to stockholders, they are intended to be reinvested into the nonprofit. Most people working at nonprofit organizations aren’t accounting professionals.

• Detailed financial documents, upon request, should be readily available.
• The reason for the difference is that non-profit organizations do not have owners, meaning there can’t be shareholders’ equity.
• Board members bring varying financial expertise, yet all need to understand the organization’s financial position well enough to fulfill their fiduciary responsibilities.
• Missing filing deadlines or requirements can result in penalties or, in extreme cases, loss of tax-exempt status.
• You can also consolidate the financials of multiple global entities into one platform, then connect business management software such as Salesforce.
• For example, Quickbooks offers non-profit functionalities to help with fund accounting complexities.

What is the best software for nonprofit bookkeeping?

Many experts now say focusing too much on low overhead can hurt your mission because you underinvest necessary tools and talent. Your specific needs might vary—organizations with government contracts might require bigger reserves to handle payment delays. Six months is even better, but a reserve of less than one month can cause potential cash flow problems.

Conducting Regular Financial Oversight and Reviews

The term “overhead” has historically carried negative connotations in the nonprofit world. However, these administrative and fundraising expenses are essential investments in your organization’s capacity and effectiveness. Your chart of accounts (COA) serves as the backbone of your accounting system. This organized directory categorizes all financial transactions and provides a clear framework for reporting.

Statement of financial position

You should also hire a financial officer or a treasurer who knows how to do bookkeeping for a nonprofit and is familiar with specialized accounting software. Nonprofit organizations have a tax-exempt status with the Internal Revenue Service (IRS). If they want to maintain this status, they need to do accurate bookkeeping. Finding the right software for your nonprofit helps determine its success, so make sure to snag those free trials and test-drive different options. With the right bookkeeping software on your side, you’ll be able to make the most of your donations and reach people who support your cause.

At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services. If you’re interested in text-to-donate capabilities, you can upgrade to Aplos Core at $139 a month. And if you own a larger nonprofit with multiple ongoing projects, Aplos’s customized solutions start at $189 a month. But if you want to accept donations (which you undoubtedly do) you can’t just sign up for Zoho Books. Zoho Checkout is free as long as you accept only 50 donations—ever, not per month.

This approach allows nonprofits to track and report on funds designated for specific programs, projects, or donor restrictions. Unlike traditional bookkeeping, which focuses on a single entity’s financial performance, nonprofit fund accounting requires careful management of multiple funds with varying purposes and restrictions. Bookkeeping for nonprofits refers to recording, organizing, and maintaining financial transactions and records for nonprofit organizations.

An audit and compliance system can help you ensure compliance and provide a framework for regular reviews of the organization’s financial practices. When selecting the right bookkeeper for your nonprofit, you’ll need to decide between hiring an in-house bookkeeper or outsourcing to a virtual service. Each option has its unique advantages for your nonprofit’s financial management. When making this decision, be sure to carefully consider your mission’s needs and resources. If you’re looking for a one-stop-shop online fundraising tool that seamlessly integrates with your CRM, marketing tool, or accounting software, take a look at Donorbox.

• By following these rules, nonprofits show they are trustworthy and ethical.
• The digitalization of financial processes means bookkeepers must be tech-savvy.
• But if you want to accept donations (which you undoubtedly do) you can’t just sign up for Zoho Books.
• These programs come with features specifically designed for nonprofits, such as tracking donations and grants, budgeting, and creating reports for stakeholders.
• There is one significant difference between a statement of activities and an income statement.

Nonprofit accounting software FAQ

Imagine a nonprofit organization that has a mission with all of the right intentions but doesn’t manage their finances well. Improper planning and ineffective funding would likely cause their programming to collapse. Meanwhile, organizations with impactful and effective accounting will be more likely to allocate their resources appropriately and drive their mission forward.

• With our free nonprofit accounting software, your foundation’s finances are in good hands.
• Keeping records right, checking them often, and following rules are key.
• Technological advances have revolutionized the way organizations operate, and the continued prevalence of paper checks in payment processes stands out as a bottleneck for many nonprofits.
• Once a year, you’ll send the required documents to an accountant to submit Form 990 to the IRS and provide tax documentation to staff.
• The key is to have a designated place where all donation information can be easily accessed and organized.
• Adding this responsibility to an existing staff member’s to-do list will likely overwhelm your employees, and your books won’t get the undivided attention they need.

When you have accurate numbers for the cost and projected revenue of fundraising campaigns, you can end your campaign in the black and amplify programming. By understanding how well you have kept to your original budget, you can make adjustments that lead your programming through the entire year, increasing your impact. Essentially, this statement will organize and categorize your expenses and revenue sources. This report also allows your organization to analyze the changes in your net assets throughout the year. For-profit companies use balance sheets to show the assets of their organization that can then be distributed to stockholders as retained earnings. However, nonprofits don’t have stockholders, so they have no need for https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ a balance sheet.