Nonprofits operate under financial rules that for-profit businesses never encounter. Restricted grants, donor-designated funds, program expense allocation, Form 990 reporting, and board financial oversight create accounting requirements that standard small-business software handles poorly — or not at all. The right accounting software for a nonprofit has to support fund accounting by design, not as an afterthought. Choosing tools built for general small-business use and hoping to adapt them creates compliance risk and hours of manual reconciliation every reporting cycle.
What Nonprofits Need from Accounting Software
Nonprofit accounting has several non-negotiable requirements that set it apart from standard bookkeeping.
Fund accounting. The foundational requirement: the ability to track money by fund — operating, restricted, temporarily restricted, endowment, capital campaign. Your software must enforce fund separation so restricted dollars cannot be accidentally spent outside their designated purpose.
Grant tracking. Most nonprofits receive grants with specific restrictions, timelines, and reporting requirements. Your accounting software should let you track grant income and expenditures against each grant’s budget, monitor spend-down deadlines, and generate reports showing funder-required financial summaries without manual extraction.
Form 990 preparation support. The Form 990 requires you to allocate expenses between program services, management and general, and fundraising — a three-way split that standard accounting software doesn’t support natively. Nonprofit-specific tools either include 990 preparation features or export data in the format your tax preparer needs.
Donor restrictions management. Gifts from donors can come with conditions: restricted to a specific program, restricted to capital use only, or given as multi-year pledges. Your accounting software needs to track these restrictions and release them to the operating fund only when the conditions are met.
Board-ready financial reporting. Nonprofit boards require Statement of Financial Position, Statement of Activities, and Statement of Functional Expenses — different from the P&L and balance sheet a for-profit entity produces. Software built for nonprofits generates these reports natively.
Best Accounting Solutions for Nonprofits
| Software | Best for | Starting price | Fund accounting |
|---|---|---|---|
| QuickBooks Nonprofit | Small-to-mid nonprofits, broad adoption | $85/mo | Partial (via classes) |
| Aplos | Small nonprofits, grant-heavy organizations | $59/mo | Native |
| Xero (nonprofit plan) | Tech-forward teams, clean UI | From $15/mo* | Via tracking categories |
| Sage Intacct Nonprofit | Mid-to-large nonprofits, complex grants | Custom pricing | Native, advanced |
| Wave | Very small nonprofits, minimal budgets | Free | No |
*Xero offers discounted pricing to registered nonprofits in some regions.
Software Reviews
QuickBooks Nonprofit (part of QuickBooks Online with nonprofit-specific features) is the most widely used accounting solution among small and mid-sized nonprofits. Its Class and Location tracking features allow fund-like separation of income and expenses, and there is a large ecosystem of accountants, bookkeepers, and third-party apps familiar with the platform. The Form 990 reporting is not fully native but most CPAs working with nonprofits know how to extract the required data. QuickBooks strikes the best balance between nonprofit functionality and widespread support availability.
Aplos is purpose-built for nonprofits and churches. It includes native fund accounting, donation tracking, grant management, and Form 990 reporting in a single platform designed from the ground up for tax-exempt organizations. The interface is simpler than QuickBooks, and Aplos includes a built-in donor database — reducing the need for a separate CRM for small operations. For nonprofits whose primary complexity is managing multiple restricted grants rather than high transaction volume, Aplos is often the cleaner fit.
Xero with a nonprofit plan suits tech-forward nonprofit teams that want a modern, clean interface with strong bank reconciliation and third-party integrations. Xero’s Tracking Categories provide partial fund separation, though they are less rigid than true fund accounting. Xero’s strength is its ecosystem — hundreds of integrations for payroll, expense management, and CRM — and its usability for non-accountants. Registered nonprofits may qualify for discounted pricing.
Enterprise and Free Options
Sage Intacct Nonprofit is the enterprise-grade choice for mid-to-large nonprofits managing complex multi-funder grant portfolios, multiple entities, or high transaction volumes. It offers true dimensional fund accounting, automated grant compliance tracking, and deep reporting capabilities. Sage Intacct is substantially more expensive than the other options and requires dedicated training — it is not appropriate for organizations with limited staff or simple finances.
Wave is the free option for nonprofits in their earliest stage — pre-grant, minimal transactions, and no fund restrictions to track. It handles basic income and expense recording, generates standard financial reports, and processes online donations with a payment fee. Its limitations become apparent immediately once grant tracking or fund separation is required.
How to Choose Accounting Software as a Nonprofit
Match complexity to software depth. A volunteer-run community organization with one operating fund and no grants can run on Wave or basic QuickBooks indefinitely. A nonprofit managing six concurrent restricted grants and filing a complex 990 needs Aplos or Sage Intacct.
Prioritise native fund accounting if grants are central to your model. If restricted grant funding represents more than 30% of your revenue, native fund accounting — not a workaround using classes or tracking tags — is worth paying for. Aplos or Sage Intacct are the right choices in this scenario.
Consider your accounting support network. QuickBooks has the largest pool of nonprofit bookkeepers and accountants. If you rely on external accounting support, the software your bookkeeper already knows reduces onboarding cost.
Check if discounted nonprofit pricing is available. Xero, QuickBooks, and Sage all offer nonprofit pricing in some form — verify current rates directly with each vendor before budgeting.
For most small nonprofits, QuickBooks Nonprofit or Aplos will cover 90% of requirements at a manageable cost. Organizations with complex grant portfolios should evaluate Sage Intacct Nonprofit. Those just starting out can use Wave until their first restricted grant arrives.
See also: Accounting Software | CRM Software | Project Management Software