QuickBooks for Nonprofits: Benefits, How to Use It, and FAQs

Managing a nonprofit’s finances is no small task. As an executive director, you have a mission to focus on, fundraising to manage, and programs to oversee. However, QuickBooks for nonprofits can make keeping accurate financial records easier.

QuickBooks Online (QBO) is a popular accounting software that many nonprofits use to track donations, expenses, and grants. But how does it work? Most importantly, should you take on the responsibility of learning it yourself, or is outsourcing to an accountant the better choice?

In this article, we’ll explore why and how to use the QuickBooks platform in nonprofit accounting for more accuracy and ease. We'll also explain the pros and cons of working with an accountant vs. DIY-ing it yourself.

What Is QuickBooks for Nonprofits?

QuickBooks is a popular cloud-based accounting software that nonprofits can adapt to their financial management needs. It's not designed exclusively for nonprofit organizations, but QuickBooks Online offers features that work well for tracking nonprofit finances.

Nonprofits can use QuickBooks to record donations, track expenses, manage program costs, and generate financial reports for board meetings and compliance requirements.

Many nonprofit organizations configure the chart of accounts and reporting tools to handle fund accounting needs, allowing them to monitor restricted funds and program-specific finances.

With over 71% of nonprofits seeing an increase in demand for their programs and services, staying organized with your accounting system is more important than ever.

Benefits of QuickBooks for Nonprofits and Churches

QuickBooks offers several advantages that make financial management easier for nonprofits and churches. The software offers specific tools that help track donations, manage expenses, and create reports that board members and donors need to see.

• Donor Management: QuickBooks helps track individual donations, recurring gifts, and grants with detailed reporting that shows the complete history of your donor relationships.
• Financial Transparency: The platform generates clear financial reports that demonstrate accountability to your board, donors, and regulatory agencies with minimal effort.
• Program Cost Tracking: QuickBooks allows you to allocate expenses to specific programs or grants so you have accurate data on how funds are used across your organization.
• Integration Capabilities: The software connects with many fundraising platforms, CRM systems, and payment processors to create a seamless financial management system.

QuickBooks provides the foundation for sound financial management that nonprofits need to maintain their financial health.

Are There Downsides of QuickBooks for Nonprofits?

QuickBooks works well, but it can be hard to use without accounting knowledge. The downsides of QuickBooks have less to do with the platform and more with the fact that nonprofit accounting is hard to DIY.

Here are the main challenges:

1. Time-Consuming: Learning and managing QuickBooks Online can take significant time away from fundraising, program development, and strategic planning.
2. Risk of Errors: Without accounting expertise, it’s easy to make common accounting mistakes that could impact compliance, tax filings, or grant reporting.
3. Compliance Challenges: Nonprofits have specific accounting rules (such as tracking restricted vs. unrestricted funds) that can be complex to navigate without professional guidance.
4. Lack of Strategic Financial Insight: An accountant can provide valuable advice on budgeting, forecasting, and financial sustainability, which you might miss when doing it yourself.

QuickBooks is the most popular accounting software with 81% of the market (compared to Sage 50 at 10% and Xero at 9%). It's a good tool, but many nonprofits find it hard to use without help from someone with accounting experience.

How Do I Set Up QuickBooks for Nonprofits?

Setting up QuickBooks for your nonprofit is a relatively straightforward process.

1. Choose the right version: QuickBooks Online Plus or Advanced typically works best for the nonprofit world because they allow tracking of different programs.
2. Set up your chart of accounts: Create account categories that match nonprofit needs, including different fund types and program areas.
3. Enable class tracking: This feature helps separate transactions by program, grant, or funding source.
4. Customize donation forms: Set up templates that properly record gifts as contributions rather than sales.
5. Connect your bank accounts: Link QuickBooks to your organization's bank and credit card accounts so that transactions import automatically.

Many nonprofits benefit from having an accountant help with the initial setup so that all of your financial information is properly structured.

How to Use QuickBooks for Nonprofits?

Once set up, here's how to use QuickBooks effectively for your nonprofit:

• Track donations: Record each donation with the donor's information and any restrictions on the funds.
• Categorize expenses: Assign expenses to specific programs or administrative categories to track how you use funds.
• Run regular reports: Generate financial statements monthly to monitor your nonprofit's financial health. Key reports include Statement of Financial Position (Balance Sheet), Statement of Activities (Income Statement), and Statement of Functional Expenses.
• Manage grants: Use the class tracking feature to monitor spending against specific grants and create reports for grantors.
• Prepare for audits: Keep good documentation for all transactions and use QuickBooks' attachment feature to store digital copies of receipts.

QuickBooks makes it easy to keep accurate records and stay financially compliant, especially when you have to file taxes for informational purposes.

Is QuickBooks Free for Nonprofits?

QuickBooks is not free for nonprofits, but it does offer special discounted pricing.

Nonprofit organizations can access these discounts through TechSoup, a marketplace that connects nonprofits with technology products at reduced costs.

Can a Non-Accountant Use QuickBooks?

You can use QuickBooks without being an accountant, but many nonprofits find that working with an accounting professional provides important benefits. The software is designed to be user-friendly, but nonprofit accounting has unique requirements that can be challenging to navigate alone.

Pros:

1. Expertise and Accuracy: Professional accountants understand nonprofit accounting regulations and can help maintain accurate records.
2. Time Savings: Outsourcing allows you to focus on mission-driven work while an expert handles your financials.
3. Compliance and Reporting: Accountants ensure financial statements are compliant with IRS regulations and grant requirements.
4. Strategic Financial Guidance: An accountant can provide insights on cash flow management, budgeting, and financial health to help you make informed decisions.

Cons:

1. Cost: Hiring an accountant can be expensive, especially for smaller nonprofits with limited budgets.
2. Less Control: You may have less immediate access to your financial data or may need to wait for reports from your accountant.
3. Finding the Right Fit: Not all accountants specialize in nonprofits, so it may take time to find a professional who understands your needs.

If it makes sense for your organization and budget, working with an accountant who specializes in nonprofits is often the best choice. They bring expertise that helps avoid costly mistakes and can save you time in the long run on your nonprofit's books.

Should You Outsource Accounting for Your Nonprofit?

The right choice depends on your nonprofit’s size, budget, and internal capacity. If you have a small organization with limited transactions, learning QuickBooks Online might be feasible.

However, if your nonprofit receives multiple grants, tracks restricted funds, or needs detailed financial reporting, outsourcing to an accountant can provide peace of mind and ensure compliance.

Some nonprofits find a middle ground—learning the basics of QuickBooks Online to track daily transactions while outsourcing financial reviews, tax filings, and audits to an accountant.

FAQs

Do Nonprofits Get a Discount on QuickBooks?

Yes, nonprofits can get discounts on QuickBooks through TechSoup, a nonprofit technology platform. These discounts can reduce your costs compared to standard pricing. To access these special rates, you'll need to register with TechSoup and verify your nonprofit status. This process takes a little time but is worth the savings for most organizations.

What Is the Best QuickBooks Version for Nonprofits?

QuickBooks Online Plus is the best option for many nonprofits. It offers the right balance of features and cost, including class tracking for programs and funds, budget management tools, and reporting options that nonprofits need. Larger organizations with multiple departments or complex funding sources might benefit from QuickBooks Online Advanced, which offers more customization and user access controls.

Is QuickBooks Good for Churches?

QuickBooks works well for churches because it can track donations, manage member contributions, and separate funds for different ministries or projects. Churches can create custom reports for board and congregation updates and track restricted donations for special projects like building funds or mission trips.

Does QuickBooks Do Profit and Loss?

Yes, QuickBooks automatically creates profit and loss statements. These reports show your income, expenses, and bottom line for any time period you select. For nonprofits, QuickBooks can separate these reports by program, fund, or grant, which helps you see exactly how money flows through different parts of your organization.

Which Is Better, Quicken or QuickBooks?

QuickBooks is better for nonprofits than Quicken. Quicken works well for personal finances, but QuickBooks is designed for organizations and offers nonprofit-specific features like fund accounting and donation tracking. QuickBooks also provides more detailed reporting options, better user access controls, and stronger audit trails, which are all important for nonprofit compliance and transparency.

Why Outsourcing to Us Is the Best Choice

At Complete Balance Accounting & Consulting, we specialize in nonprofit accounting, ensuring accurate financial records, compliance, and strategic financial guidance. By outsourcing your accounting to us, you can focus on what truly matters—advancing your mission and making an impact.

Don’t let accounting distract you from your nonprofit’s mission. Let us handle the numbers so you can focus on making a difference.

Contact us today to get started with expert nonprofit accounting services tailored to your needs.

‍