Quick answer: QuickBooks Online works well for most small and midsize nonprofits when you set the business type to nonprofit, use classes to track programs and restricted funds, and code every expense to program, management and general, or fundraising. Choose the Plus or Advanced plan if you need classes.
QuickBooks Online is not built only for businesses. With the right setup, it handles donations, grants and program reporting well for most small and midsize nonprofits. Here is how a Certified QuickBooks Online ProAdvisor sets it up.
Start with the nonprofit settings
When you tell QuickBooks Online that your organization is a nonprofit, it uses nonprofit language in its reports. The profit and loss becomes the Statement of Activity, and the balance sheet becomes the Statement of Financial Position.
Tip: Nonprofits may qualify for discounted QuickBooks Online subscriptions through TechSoup. Check before you buy.
Use classes for programs and funds
Classes let you tag each transaction by program or fund, so you can run reports for each one. Many nonprofits use classes for programs and track restricted grants with a separate class or with tags. Classes are available on the Plus and Advanced plans.
Recording donations and grants
- Set up donors as customers so you can see giving history
- Record donations with sales receipts or deposits, coded to the right income account and class
- Record grants in their own income accounts, separate from individual gifts
- Track restricted gifts so they can be released when spent
Coding expenses by function
Use your chart of accounts and classes together so every expense lands in program, management and general, or fundraising. Shared costs like rent and salaries should be allocated on a consistent basis. See our nonprofit chart of accounts for a simple structure.
Reports to use each month
- Statement of Activity by class, to see each program
- Statement of Financial Position
- Budget versus actual
- Donor and grant reports
Our guide to nonprofit financial statements explains how to read each one.
→Related guideNonprofit Bookkeeping: Fund Accounting, Chart of Accounts and a Monthly ChecklistThis guide covers the fund accounting and monthly routine that your QuickBooks setup should support.QuickBooks for Nonprofits FAQs
Is there a nonprofit version of QuickBooks Online?
There is no separate nonprofit edition of QuickBooks Online. You use a regular plan and set the organization type to nonprofit, which changes report names and some labels.
Which QuickBooks Online plan is best for a nonprofit?
Most nonprofits need at least Plus, because classes for programs and funds are not available on lower plans. Larger organizations with more users or complex reporting may need Advanced.
Can QuickBooks Online track restricted funds?
Yes, with classes or separate accounts for restricted gifts and grants. You still need to record a release of the restriction when the money is spent as intended.
Should donors be set up as customers in QuickBooks?
Yes. QuickBooks treats donors as customers, which lets you see each donor’s giving history and run reports for acknowledgments.
Can QuickBooks Online replace donor management software?
For small organizations it can handle basic donor records. Groups with many donors or detailed campaigns usually pair it with dedicated donor software and send summary entries into QuickBooks.
Have a ProAdvisor set it up
We set up and clean up QuickBooks Online for nonprofits across Northern Virginia, DC and Maryland. Learn more about our QuickBooks ProAdvisor and nonprofit accounting services.
This article is general information and not tax advice for your situation. Tax rules change, so talk with a qualified professional before making decisions.
