Nonprofit accounting cheat sheet for small teams & new treasurers

You probably didn’t join your nonprofit organization because you love crunching numbers. You’re passionate about your mission, not the minutiae of accounting. But there are still nonprofit accounting standards you must follow to stay compliant and earn your donors’ trust.

This nonprofit accounting guide cuts through the complexity, so you get what you need, including key concepts, a monthly close routine, and a free cheat sheet to keep everything organized, without getting lost in the details.

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Please consult a qualified nonprofit accountant or financial professional for guidance specific to your organization.

Key takeaways

• Understand fund accounting 🤔 Track every gift as either net assets with donor restrictions or without donor restrictions, based on donor intent, so you can show funders how their money was used.
• Select the right accounting method 💸 Cash accounting is simpler for small teams, while accrual accounting is required for GAAP compliance and often preferred by grant funders.
• Set up a chart of accounts 💰 Organize transactions into clear categories (assets, liabilities, net assets, revenue, expenses) for accurate financial tracking and reporting.
• Implement internal controls 💪 Assign board oversight, segregate duties, protect assets, and define reimbursement policies to reduce fraud risk and support compliance.
• Fulfill compliance and reporting requirements ✅ File IRS Form 990 annually, prepare monthly or quarterly financial reports, and maintain organized documentation for audits or grants.
• Run a monthly close 🔁 Record every gift with its restriction, reconcile against the bank and payouts, then release restrictions and review budget vs. actuals.
• Use nonprofit accounting tools 🧈 Integrate a fundraising platform like Givebutter with your nonprofit accounting software (like QuickBooks Online, Xero, or Sage Intacct via Zapier) to streamline donation tracking, reduce manual data entry, and keep your fundraising and finances in sync.

Download your free nonprofit accounting cheat sheet

Running a nonprofit is hard enough, so we created a free cheat sheet to make your accounting easier. This one-pager walks you through the essential steps: setting up your chart of accounts, tracking restricted funds, staying compliant, creating a monthly routine, and reporting to your board.

Use it to stay organized, compliant, and audit-ready, whether you’re just getting started or refining your current process.

Freebie alert!

Download your free nonprofit accounting cheat sheet →

How nonprofit accounting works

Nonprofits use fund accounting to track money based on its purpose and any related restrictions, on either an accrual or a cash basis. Unlike for-profit accounting, which focuses on owners’ equity, nonprofit accounting focuses on net assets, donor intent, and demonstrating how funds were used.

In essence, accountability is at the core of nonprofit accounting. Donors and stakeholders want to know that the money coming into your nonprofit is being used to advance your mission.

Fund accounting for nonprofits 🤝

In the nonprofit world, every dollar has a job. That’s why nonprofits use fund accounting to track and categorize money based on donor intent.

Under FASB’s ASU 2016-14, nonprofits report two classes of net assets: net assets with donor restrictions and net assets without donor restrictions.

👀 Did you know? According to a Givebutter survey of 81 nonprofit professionals, restricted vs. unrestricted funds was the finance concept they struggled most to understand.

Dive deeper

Understand how fund accounting works →

Cash vs. accrual accounting ⏰

When it comes to recognizing income and expenses, nonprofits generally use one of two methods: cash accounting or accrual accounting. The main difference between them is when transactions are recorded.

Whatever method you select (with the help of an accountant), we recommend that small nonprofits stick with it, since switching midyear can get messy.

💡 Pro tip: If you’re applying for large grants, preparing for an audit, or reporting for funders, accrual accounting is typically a better fit.

Learn more

Understand key nonprofit financial statements →

Getting started (even on a budget)

Nonprofit organization accounting can feel overwhelming, especially if you’re starting from scratch. But there are a few simple, actionable steps you can take to lay the foundation for your accounting process.

1. Set up your chart of accounts (with sample line items) 🗂️

A chart of accounts groups transactions into clear categories so you can see where money is coming from and where it’s going.

Most nonprofits organize their accounts into five basic types:

• Assets 💰 Everything you own (e.g., bank balance, equipment)
• Liabilities 📉 Anything you owe (e.g., loans, deferred revenue)
• Net assets ⚖️ Assets minus liabilities
• Revenue 💸 Donations, grants, membership dues, or other funding
• Expenses 📋 Mission-related and administrative costs

Prioritize clarity when building your chart of accounts, especially in the beginning.

💡 Pro tip: Assign each account type a number range (e.g., 1000s for assets, 4000s for revenue) to keep everything organized as your accounting grows.

Here is a sample chart of accounts for a small- to mid-sized nonprofit:

Copied!

Download Started!

More to explore

Build a chart of accounts that fits your programs →

2. Track restricted gifts from day one 🏷️

One of the most important steps in the entire nonprofit accounting process is to assign each restricted grant or gift a code or class in your accounting software and capture the donor’s intent at the time of the gift. In nonprofit grant accounting, a grant condition and a donor restriction are not the same thing, so it’s important to outline exactly how you’ll treat both with help from an accountant.

Givebutter funds label each gift by purpose, and you can export them for your bookkeeper. Keep in mind they’re labels, not separate accounts: the money still lands in a single payout, so your books handle the actual fund accounting.

3. Use the right tools ⚒️

Spreadsheets can be a great starting point. But as your nonprofit grows, you’ll likely need additional accounting tools. Integrating your accounting software with a fundraising platform like Givebutter can help streamline the whole process. When donations, checks, and spending are tracked at the point of origin, month-end reconciliation takes less time.

With Givebutter Plus, the native QuickBooks Online integration syncs donations, ticket sales, and fees into your books, and mapping rules route each gift to the right account or class by fund, campaign, or payment method. If you use Xero or Sage Intacct, you can connect them through Zapier.

For extra help, nonprofits can connect Givebutter to ChatGPT or Claude to ask questions about their fundraising data.

Your monthly close routine

Accounting for nonprofit organizations is less about fancy software and more about a simple, repeatable monthly routine. According to our survey, over 50% of respondents say they formally review financials monthly.

Here is the three-step monthly routine you can complete in an afternoon.

1. Record & categorize every gift 📥

No matter what kind of gift your team receives, you should record it immediately. Include information like donor, campaign, fund or restriction, and payment method so you’re never working with incomplete or duplicate information.

For gifts that don’t automatically feed into your system (like checks), use tools like the Givebutter mobile app that allow you to photograph a donation check, connect it to the donor and campaign, and send the funds to your Givebutter Wallet.

2. Reconcile against the bank & your payouts 🔍

Matching your books to bank and payout statements each month, including the reasons for any differences (fees, refunds, transfers between accounts, and timing), makes year-end filing and audits much less painful.

If you record only the net payout, revenue is understated and fees disappear from your expenses. Instead, record the full gift as revenue and the fee as an expense to keep financial statements and the 990 accurate.

3. Release restrictions & review the numbers ✅

Once restricted funds have been spent on their intended purpose or the restriction period has ended, they’re no longer restricted. At this point, you’ll want to record a “release,” so it moves from net assets with donor restrictions to net assets without donor restrictions. We recommend reviewing fund restrictions monthly, then running a quick budget vs. actuals check.

A practical way to track restricted awards is to assign each one a tracking code, tag expenses to the grant, and record restriction releases as they happen.

Dive deeper

Set up a bookkeeping rhythm for month-end ease →

How to do accounting for a nonprofit with a small team

Accounting for nonprofit organizations doesn’t require a large finance department to stay compliant. The steps below will help protect your nonprofit, reduce the risk of fraud, and build trust with funders and board members, even with a small team.

Implement internal controls 🎛️

Internal controls are the policies and procedures that reduce risk and keep your nonprofit finances clean.

Here’s how your small team can implement these safeguards:

• Board oversight: Ensure someone on the board (such as the treasurer) regularly reviews financial reports.
• Protect assets: Create a system to deposit cash donations, store assets, and record gifts as they arrive.
• Reimbursements & receipts: Establish a policy for expense reimbursements and reconcile card receipts monthly. With Givebutter Spend Cards, organizations can pay for purchases directly from their Givebutter Wallet, track current spend against each card’s limit, upload receipts, and add memos.
• Segregate duties: Divide responsibilities between team members. For example, one person records incoming checks while another approves expenses.

Maintain & file required documents

Most tax-exempt organizations must file a version of IRS Form 990 annually, such as Form 990-N, Form 990-EZ, or the full Form 990, depending on their size and financial activity. This typically satisfies federal requirements, though state rules may vary.

To stay compliant with grant bodies and be audit-ready, keep a checklist of important documents, such as:

• Tax documentation: Tax-exempt letter from the IRS or Form 990
• Financial information: Nonprofit budget overview or expenditure reports
• Program details: Description of your programs or past impact

💡 Pro tip: Store everything in the same folder or drive so it’s easy to locate when you need it.

Learn more

Get your books audit-ready before a funder asks →

Prep reports for your board

Board reporting doesn’t have to be intimidating. Whether you’re using spreadsheets, visuals, or both, what matters most is clarity, consistency, and context. Here’s a simple cadence most nonprofits follow:

With Givebutter Plus, explore ready-made reports on revenue, donor trends, campaign performance, and engagement. Choose a date range to see what’s changing and where your team may want to focus.

👀 Did you know? Regular reports don’t just keep your board informed—they’re key to monitoring your bottom line. According to the Nonprofit Finance Fund 2025 survey, 52% of nonprofits have three months or less of cash on hand, and 18% have one month or less.

Freebie alert!

Download your free nonprofit treasurer report template →

Less time on spreadsheets & more time on your mission

You didn’t join your nonprofit to crunch numbers. That’s why the right steps and a monthly routine are essential—they give you more time to focus on what really matters.

Record every gift, reconcile against the bank, and release restrictions each month, and your board reports (and Form 990) get much easier. With Givebutter, you can tag gifts by fund, record checks in the mobile app, and track spending from your Givebutter Wallet. Add Givebutter Plus to sync donations to QuickBooks Online and explore ready-made reports to spot fundraising trends.

Create your free account today and see how Givebutter makes fundraising and accounting work better, together.

FAQs about nonprofit accounting

What nonprofit accounting standards (FASB & GAAP) do we need to follow?

Generally Accepted Accounting Principles (GAAP) for nonprofits, set by the Financial Accounting Standards Board (FASB), require the proper categorization of revenue types, honoring donor funding restrictions, allocating expenses by function, and compiling accurate financial statements.

Under FASB’s ASU 2016-14, nonprofits report two classes of net assets: net assets with donor restrictions and net assets without donor restrictions.

What kind of accounting do nonprofits use?

Nonprofits use fund accounting, which tracks money by its purpose and any donor restrictions. Small organizations may keep their books on a cash basis, but accrual accounting is required for GAAP financial statements and audits.

Do nonprofits need a CPA?

Nonprofits do not always need a CPA for day-to-day bookkeeping. But a CPA is typically needed for audits or reviews required by funders or states, and is also helpful for Form 990 and method changes.