INDUSTRIES / NONPROFIT
Nonprofit accounting servicesNonprofit accounting services.
Money that isn't all yours to spend the same way.
Every dollar a nonprofit holds carries a label most for-profit bookkeeping was never built to track — restricted or unrestricted, program or overhead, spent for the purpose a donor actually gave it for or not. Bookkeeping for nonprofits has to carry that label all the way through the books, not just note it in a spreadsheet and hope the year-end audit doesn't ask hard questions.
A generic chart of accounts
hides the wrong things
Fund accounting is the fundamental difference, and it isn't optional. A for-profit chart of accounts tracks one pool of money against one set of owners. A nonprofit has to track multiple pools at once, each with its own restrictions on what it can be spent on, and a chart of accounts that doesn't reflect that structure can't answer the most basic question a board member or auditor will ask: can we actually spend this money on what we want to spend it on?
Under FASB ASU 2016-14, nonprofit financial statements present net assets in two classes — net assets without donor restrictions and net assets with donor restrictions — replacing the older three-tier system of unrestricted, temporarily restricted and permanently restricted net assets. The classification changed, but the underlying obligation didn't: money still has to be tracked against whatever the donor actually specified, and released from restriction only once that purpose or condition has genuinely been met, not when it's convenient to spend it.
Functional expense allocation is the other place generic bookkeeping falls short. Every expense has to be classified by both what it is — salaries, rent, supplies — and what it's for: program, management and general, or fundraising. Since ASU 2016-14, that requirement applies to every nonprofit, not just the voluntary health and welfare organizations it used to be limited to. A setup that only tracks expenses by category, with no functional split, can't produce the Statement of Functional Expenses that both the IRS and most funders expect to see.
Then Form 990 itself. It isn't really a tax return in the way a for-profit return is — it's a public disclosure document, and a fair amount of what it asks for, including the functional expense breakdown and program service accomplishments, has to come directly from how the books were kept during the year. Reconstructing that at filing time from books that never captured it properly is where nonprofit tax prep gets expensive and slow.
What usually goes wrong
- Net assets not split between with and without donor restrictions
- Restricted funds spent before the restriction was actually released
- Expenses tracked by category only, with no functional split
- Grants not tracked separately, so funder reports mean reconstructing after the fact
- In-kind donations unrecorded, or recorded without a defensible valuation
- Books that can't produce what Form 990 actually requires
Bookkeeping from $299/month · Cleanup from $200 per month behind
Accounting for nonprofit organizations,
built around the restrictions
Fund accounting, donor restrictions and functional reporting handled as the standard shape of the work, not an add-on.
Fund accounting & net assets
Net assets without donor restrictions and with donor restrictions tracked per FASB ASU 2016-14, so every fund shows what it can actually be spent on.
Donor restrictions & release
Temporarily and permanently restricted gifts tracked individually, released to unrestricted only once the donor's purpose or condition has genuinely been satisfied.
Functional expense allocation
Every expense split by program, management and general, and fundraising, so the Statement of Functional Expenses is a report, not a year-end reconstruction.
Form 990 preparation support
Books kept all year in the shape Form 990 actually needs, so filing draws from clean records instead of rebuilding them in the spring.
Grant tracking & funder reporting
Each grant tracked separately against its own budget and restrictions, so reporting to a funder is a pull, not a project.
In-kind donation valuation
Contributed goods and services recorded at fair value and disclosed per FASB ASU 2020-07, separate from cash gifts.
Board-ready reporting
Monthly financials a board with no accounting background can actually read and act on.
You'll recognise this if...
None of these mean anything is broken. They mean the books were set up to satisfy a tax return rather than to run an organization, which is the normal starting point.
One big pot of money
Restricted and unrestricted funds sit in the same bucket, and nobody's entirely sure what's actually free to spend.
Functional expenses at year-end only
Program versus overhead gets sorted out once a year for the audit, not tracked as the year goes.
Grant reports built from memory
A funder asks for a report and it takes days of digging through the general ledger to reconstruct what was actually spent on their grant.
In-kind gifts go unrecorded
Donated space, equipment or professional services never make it into the books at all.
What clarity looks like
for your board and your funders
Within two months your board sees net assets split the way FASB actually requires, not one number that hides how much is genuinely free to spend.
Grant reporting stops being a scramble. Each grant's spending is visible against its own budget in real time, so a funder's request for a report is a pull from the system rather than a reconstruction project.
The Statement of Functional Expenses becomes something your bookkeeping produces monthly, not something built once a year from a spreadsheet nobody else understands.
And Form 990 stops being a fire drill. Preparation is priced separately — our nonprofit tax return work starts at $1,500, see the full breakdown on our pricing page — but it's faster and cheaper when the books were kept in the right shape all year. That's what our monthly bookkeeping is actually built to set up, for a nonprofit specifically rather than a for-profit setup with the labels changed.
BOOK A FREE CALLEvery client gets
- Replies within 48 hours, guaranteed
- Books closed by the 15th, every month
- Flat monthly pricing, no hourly billing
- A plain-English summary with every report
- The same team every single month
- Cancel any time, files handed over cleanly
Nonprofit accounting questions
Regular bookkeeping tracks one pool of money. Fund accounting tracks several pools at once, each with its own restrictions on what it can be spent on, which is what lets you answer whether you can actually afford to spend a given dollar on a given thing — a question ordinary bookkeeping was never built to answer.
FASB ASU 2016-14 combined them into a single class, net assets with donor restrictions, alongside net assets without donor restrictions. Current GAAP financial statements use that two-class system, but we still track the underlying detail by fund and by donor restriction, because that's what actually controls what the money can be spent on.
Yes, since ASU 2016-14 extended that requirement to every nonprofit, not just the voluntary health and welfare organizations it used to apply to. It can be a separate statement, part of the statement of activities, or in the notes, but the program, management and general, and fundraising split has to exist somewhere.
It depends on gross receipts and total assets. Organizations with gross receipts normally at or below $50,000 can file the 990-N e-Postcard; under $200,000 in gross receipts and under $500,000 in total assets, the 990-EZ; at or above either threshold, the full Form 990. Private foundations file Form 990-PF regardless of size.
Each grant gets its own tracking against its own budget and restrictions, so spending against that specific grant is visible at any point rather than something we reconstruct when a funder asks for a report.
At fair value when received, disclosed separately from cash contributions per FASB ASU 2020-07, including the valuation method used and whether the gift carried donor restrictions. Donated services are only recorded if they meet specific GAAP criteria, which we'll walk through with you.
Yes, priced separately from monthly bookkeeping, starting at $1,500 — see our pricing page for the current rate. It's faster and cheaper when the books were kept in the right shape all year, which is exactly what our monthly work is built to set up.
No — nonprofit bookkeeping carries the same fund-accounting restrictions regardless of size. A small nonprofit needs the same structure as a larger one, just scaled to fewer funds and grants running at once.
Find out if your funds
are actually tracked correctly
Thirty minutes, no pitch. We'll look at how your net assets and grants are currently tracked, flag anything exposed, and quote a flat monthly price.
BOOK YOUR FREE CALL