QuickBooks Tip: Customize Set-Up for Nonprofit Organizations


Nonprofit organizations have different tax reporting and financial reporting requirements than traditional for-profit businesses and different accounting needs. Nonprofits focus on generating funding while for-profits focus on sales and increasing the bottom line. However, QuickBooks can be a valuable tool for both types of organizations.

Although QuickBooks does offer the Premier Nonprofit edition that incorporates nonprofit-specific language and features, it does cost more than the standard version. The good news is, there is another option: You can customize the set-up of the traditional versions of QuickBooks – including QuickBooks Online – to meet the needs of a nonprofit organization.

For starters, nonprofit organizations can rename QuickBooks labels to reflect their terminology. For example, a label called “Create a Sales Receipt” in QuickBooks Pro is the equivalent of the “Enter Donations” label in QuickBooks Nonprofit. Likewise, the “Create Invoice” field can be replaced with “Enter Pledges” to meet the nonprofit’s needs.

When it comes time to run reports, the standard QuickBooks reporting function creates the same reports as the QuickBooks Nonprofit edition, with the only difference being the labels. For example, the “Biggest Donors” label in QuickBooks Nonprofit is the same as “Sales by Customer” in QuickBooks Pro. By reworking some of the names in QuickBooks, nonprofits can use the standard QuickBooks Pro without having to spend extra for the official nonprofit edition.

Tracking nonprofit information in QuickBooks

–Enter the organization’s members, donors, and clients in the “Customer: Job List” field so you can keep track of their information. You can add custom fields in the “Additional Info” tab to track meaningful data. Make sure to keep up-to-date address information so you can easily generate letters and track important information for donors.
Nonprofit organizations may find it useful to track and report members, donors and clients by type. For example, you might want to track type of contributor or member (sponsor, donor, patron, or subscriber); location of contributor or member; industry represented by donor or member; or type of services provided to clients. You can print reports, labels, and summary statements by customer type.

Tracking volunteers for nonprofit organizations is also important for nonprofits, which rely heavily on this extra help. It’s a good idea to track volunteers separately from members, donors and clients, which you can do by entering their information in the “Other Names List.” Volunteers who are already listed as members, donors or clients will need to be entered with a slight name variation (for example, John Smith “Member” versus John Smith “Volunteer”). A notes option is available to track and record information about the volunteers.

Recording donations in QuickBooks

Nonprofit organizations that receive financial donations that were not invoiced may enter them in QuickBooks either as a deposit or a cash sale. However, deposits do not allow users to track items (the account is entered rather than the item) or generate a cash receipt. Consequently, such donations generally should be entered as cash sales.

In addition to monetary contributions, nonprofits often receive donated goods and services. Donated goods should be recorded as revenue and as inventory or expense (whichever is appropriate) at fair value in the period in which they are received. Donated services should be recorded at fair value if the services a) create or enhance a nonfinancial asset or b) involve specialized skills – provided by entities possessing those skills – that would be purchased if they were not donated. Donated services are recorded as revenues and as additions to nonfinancial assets (if related to a nonfinancial asset) or expense.  The best way to record donated goods and services in QuickBooks is through a journal entry.

Be sure to record promises to give or pledges so you can keep track of planned donations. Recording pledges in QuickBooks varies depending on whether the organization keeps its accounting records on the accrual or cash basis of accounting.

Here are a few additional QuickBooks tips for nonprofits:

  • Require passwords – Each user should have a unique password for accessing QuickBooks.  This will help to prevent unauthorized access to the organization’s financial information.
  • Use classes. Generally accepted accounting principles require nonprofit organizations to report expenses by function: program, management and general, and fundraising. Classes provide a way for organizations to track these expenses. You should set up classes for each program, as well as management and general and fundraising.
  • Set up budgets. Most nonprofit organizations require yearly budgets. These are easy to set up inside of QuickBooks with projected revenue and expenses at the beginning of the year.  Having a budget entered into QuickBooks means you can easily compare budget to actual at any time throughout the year to determine how your organization is performing.
  • Turn on the audit trail. The audit trail feature keeps track of all transactions entered and all changes made, as well as who changed it. This feature provides additional controls and protection for your organization’s data.
  • Consider using accounts on your profit and loss statement that mirror the Form 990. This will facilitate the preparation of the tax forms.

For more QuickBooks tips, you can refer to this helpful book “Running QuickBooks In Nonprofits.” Prior to contacting us, please note our fee range of $100-$200/per hour  for any additional services.

Lisa Kahn Little, CPA, is a Entrepreneurial Services Associate Principal at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S.

  1. Diana Padilla says:

    I am looking for a person who can help me set up my accounts in QuickBooks. We are a non profit and work with grants

    • Kaufman Rossin says:

      Hello Diana! We would be happy to help provide guidance on that. Please fill out the “contact us” form on the website and include details of the Quickbooks setup needed. One of our professionals will reach out to you to discuss your specific situation in more detail.

  2. Donna Lantz says:

    We are a resident-managed not for profit HOA. We receive dues from our neighbors, not donations. Can the donations label be changed to accommodate?

    • Kaufman Rossin says:

      Hello Donna! Yes, the label can be changed to read “dues.” This is done by editing the name of the chart of account on the Lists menu. Can you confirm if you are using Quickbooks Desktop or online?

  3. Ray says:

    Hello, would you advise setting up jobs to represent grants? We generally have 10+ grants per year. In addition to the jobs, we could use classes for programs (with sub classes representing the particular programs our organization offers.) – Currently, we are using classes for program (with grants as the sub classes). This makes for a lot of data when running reports by class. Thanks for your feedback.

  4. sam smith says:

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  5. Tommy Maddox says:

    Garland County Historical Society has the 2015 version of QuickBooks NonProfit. They have used it without using the nonprofit accounts. Looking to upgrade, they would prefer not to pay for the nonprofit version. Is it possible to import the backup of the 2015 nonprofit version into the QBs Desktop pro?

  6. Glenn says:

    I understand setting up top-level classes for Fundraising, Management, and Programs to comply with IRS Form 990. We are a membership non-profit. Where does Membership go? Is it part of Management, or is it a 4th top-level Class?

    • Lisa K. Little says:

      The expenses allocated by activity on page 2 include only expenses directly related to carrying out that activity. If the membership dues relate to the programs, put them there, if not, i would put them under management.

  7. Sharon Kimble-Kramchak says:

    I’m looking for a book that will help me map my accounts to assist our CPA to prepare the 990. Everything I find is generalized information.

    • Lisa says:

      Sharon, the best book is Running QuickBooks in Nonprofits by Kathy Ivens. If that is too general, then let me know and i will see if there is something else. it may be that Quickbooks does not have mapping for not for profits.

    • amy starkey says:

      Does this book address quickbooks desktop or quickbooks online? They are quite different.

  8. Lisa says:

    In order to help you better, I would need to know what version of Quickbooks you are working in.
    A great resource for you is this book Running QuickBooks in Nonprofits
    Book by Kathy Ivens
    Let me know if you need further help

  9. Godwin says:

    Hi, I need to customise an already formed company from Profit to Nonprofit, how do do i go about it? I would like to change Invoice to Pledge, Customer to donor, Profit and Loss to Statement of Financial activity, without affecting the data already entered? Kindly help.

  10. Sandy Finnecy says:

    Our non-profit has to track member’s which include membership dues and donations income. I entered our members as customers and that is how I track that. We also have to track income/expense for a specific fundraising event that may or may not be specific to members. How do I enter this transaction on QB?

    • Lisa Grossman says:

      You need to create specific income items on the chart of accounts for those events. Or you can use class tracking.
      Good luck

  11. Victoria Barrena says:

    I set up Budgets on the NonProfit Online version but the reports are not coming out correctly, but you tell me how to recognize the errors and fix them…thank you in advance…!

  12. Megan M says:

    How can I track restricted vs. non-restricted funds in QB? The equity section of every report always shows lump sum for Net Income, which doesn’t separate out restricted vs. non-restricted income earned.

  13. Ralph Smith says:

    Hello, I am setting up new accounts for my church in QB. I have some Vanguard investment accounts that I would like to track. What would be the best way to do this? I have read several answers, but not sure what accounts I would use within my chart of accounts. This activity needs to not affect my income accounts for the church as it was already accounted for in the accounts. But want to show the account totals for reporting purposes.
    any help would be great.

  14. Tabitha says:

    I am so happy I found this page… Thanks Lisa for this information. Are there any webinars available for this type of activities?

    • Lisa Grossman says:

      Tabitha I don’t know if there are any webinars – I can recommend a great book
      Running QuickBooks in non profits by Kathy Ivens

    • Tabitha says:

      That would be great… Thanks

  15. Dawn Marie says:

    You mention using Customer:Jobs for tracking clients. Would you consider Missionaries that are serving under a Mission Board organization to be a client? What would be involved in setting up everything related to them (from Customer, Job, Class, Account #, etc.)

    I want to track Incoming Support/Gifts, Quarterly Tax Payments, General Escrow (excess of payroll/tax payments/403b transfers, admin fees, etc. for each missionary. I also want to reflect that these amounts coming in are temporarily restricted in nature (which I’m assuming I would show in the COA, but not sure)…..HELP!!! 🙂

  16. Dawn Marie says:

    Where do I go to change the labels you mention in this post?

  17. Leslie G says:

    Hi Lisa. We are trying to format our board-approved annual budget in QB. If our fiscal year begins Oct 1, do we enter the full-year budget in Oct 2014? We tried to do this yesterday but my bookkeeper said that we have to enter budgets monthly which doesn’t sound practical.

    • Lisa Grossman says:

      You do need to enter the budget monthly.
      the easiest way to do it is to enter 1/12 of the amount in the first month (which should be October if you have the fiscal year set up correctly). Then you hit “copy across” and the rest of the months populate with the amount.
      This is easiest to do and assumes that your amounts are pretty much pro-rata throughout the year.
      If there is a line item that is specifically an expense for a particular month, then you should enter the entire amount in that month.
      I hope this helps.

  18. Leicia Brown says:

    Hi, trying to set up QB to track donations recieved for soup kitchen, my part would be only to set up contact list, send letters out, track donation by one-time, monthly, anually or not at all. Where to start a complete newbie. Thank you

  19. Lydia Garza says:

    How would I set up books that were purchased for resale in a non profit. How would I post a payment received from Donor for a book. Thank you. Lydia

    • Lisa Grossman says:

      Lydia – You could record the books in several ways. One way is to record them as inventory items. Then when you sell them you need to sell that item so that it will remove it from inventory and record the cost.
      Another way is to record as prepaid expense – then manually remove the cost through a journal entry for each books sold.
      The third way would be to expense it right away.
      The method to use would be dependent on the materiality of the expense.

      The payment received from Donor would be income from sale of book. You need to indicate on the donation receipt that goods were received and the amount of the goods.
      Hope this helps

  20. PAM SNYDER says:

    Trying to set up to track contributions at our church. I need to be able to categorize them as to where the donations go: budget, building fund, food pantry, etc. Have no idea how to do that.

    • Lisa Grossman says:

      You can do this by entering the contributions to the different income line items – budget, building fund, food pantry etc. Each time you make a deposit you will enter the member’s name and break their donation out by these income lines.
      Or you can create invoices for your members – then create items that correspond to the income line items and invoice them for these pledges. then when you receive their payments you would apply the payment received against the member (customer) and record it that way.
      The first way is easier.
      Let me know if you need more help or screen shots of this.

    • Eric Life says:

      I have entered all the contributions as sales receipts. I want create a statement of giving for donor with the different areas that they gave money toward. I tried to print a statement, but all donations show as sale receipts. There is not breakout of the detail from the sales receipts.
      I do not want to have to run a report in export to Excel and break into the detail.

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