6 best accounting software for nonprofit in 2025

Accounting software is a digital tool that helps businesses and organizations manage their financial operations, like tracking income, expenses, and generating reports. For nonprofits, however, accounting software helps ensure compliance with tax regulations and provide transparency to donors and stakeholders.

‍

While businesses focus on profitability, nonprofits must manage donations, grants, and funding restrictions, all while meeting regulatory requirements. The right accounting software for nonprofits is designed to handle these challenges by offering specialized features for fund accounting, donor management, and compliance reporting.

Why do nonprofits need specialized accounting software?

Nonprofits manage money differently from small businesses. Instead of earning profits, you rely on donations, grants, and fundraising. These funds come with rules, and you must track them properly. Standard accounting software is built for businesses, not nonprofits. It doesn’t help you separate restricted and unrestricted funds, follow tax-exempt regulations, or create reports for donors.

Fund accounting works differently from business accounting

Businesses track income and expenses to increase profits. You, however, use fund accounting to separate money based on its purpose. Some funds are restricted, meaning you can only spend them on specific programs. Others are unrestricted and can cover general expenses. If you mix these up, you could violate donor agreements and lose funding.

‍

Traditional accounting software does not help you track different funds separately. Specialized nonprofit accounting software ensures you categorize funds correctly and follow spending rules.

You need to meet compliance and reporting requirements

For-profit businesses report income to calculate taxes. You need to file reports to maintain tax-exempt status. The IRS requires nonprofits to submit Form 990, which shows where their money comes from and how they spend it.

‍

Grant providers and donors also expect detailed financial reports. If you do not track funds properly, you could face penalties, funding cuts, or even lose your nonprofit status. Using nonprofit accounting software helps you generate reports automatically, reducing errors and saving time.

Your income sources need accurate tracking

Businesses make money through sales. You rely on donations, grants, membership fees, and fundraising. These revenue sources are unpredictable and come with restrictions. Some donations can only be used for specific projects.

‍

Grants have strict spending guidelines, and if you don’t follow them, you could lose access to future funding. Membership fees and program revenue must be tracked separately from donations to avoid compliance issues. It’s easy to mix these up without the right software, leading to reporting mistakes and financial problems.

Donors expect transparency

For-profit companies answer to shareholders. You answer to donors, grant providers, and board members. They need to know where their money goes. They may stop supporting your nonprofit if they do not trust your financial reports.

‍

Manually tracking contributions and creating donor reports is time-consuming and prone to errors. Nonprofit accounting software automates these reports and keeps your financial records audit-ready.

Budgeting and expense tracking are more complex

Businesses create budgets based on expected profits. You plan around available funds, which can change based on donations and grants. You must allocate money carefully, making sure most of it goes toward programs instead of administrative costs. If you receive grant funding, you need to track those expenses separately.

‍

Many grantors require detailed spending reports, and errors can cost you future funding. Without the right software, managing program budgets and tracking expenses can become overwhelming. Nonprofit accounting helps you stay on top of your budget while preventing overspending or compliance issues.

Best nonprofit accounting software

Smaller nonprofits with simple finances may rely on spreadsheets or basic bookkeeping software. However, as your nonprofit grows, financial management becomes more complex. You need to track donations, manage grants, and create reports for donors and regulators.

‍

‍

Choosing the right tool depends on your organization’s size, funding structure, and reporting needs.

1. QuickBooks: Best for small to mid-sized nonprofits

QuickBooks is an easy-to-use platform designed to manage the complex financial tasks that come with running a nonprofit. Nonprofits have unique needs, such as tracking restricted vs. unrestricted funds, managing grants, and ensuring compliance with IRS requirements. QuickBooks supports these functions by offering both automation and customization to fit the specific needs of your nonprofit.

‍

This accounting solution simplifies key tasks like expense categorization, donor tracking, and reporting. It also integrates easily with online payment processors, helping nonprofits streamline their donation collection and cash flow.

Key benefits

• Automated expense tracking helps ensure funds are correctly categorized and managed.
• Customizable financial reports are ideal for creating transparent reports for donors and board members.
• Online payment processing streamlines donations and improves cash flow.
• Multi-currency support allows easy management of international donations and transactions.
• The collaborative tools enable multiple team members to access the software, making it easy to work together on finances.

Drawbacks

• Steep learning curve for those new to the software.
• Takes up considerable storage space on devices.
• Bank feed integration issues can cause occasional syncing problems.

‍

QuickBooks is a solid option for nonprofits looking to simplify their financial management. While it has a few challenges, its extensive accounting features make it an excellent tool for nonprofits that need accurate financial oversight, compliance, and donor transparency.

2. Nonprofit+: Best for intricate financial reporting

Nonprofit+ is a comprehensive cloud-based ERP solution built specifically for nonprofit organizations. It is designed to help larger nonprofits manage their fund accounting, grant management, and donor tracking in a unified platform. Nonprofit organizations that deal with multiple revenue streams, large datasets, or intricate compliance requirements will find this software especially useful.

‍

By integrating key functionalities such as automated fund separation, budget forecasting, and FASB-compliant financial reports, Nonprofit+ helps organizations simplify financial operations and maintain transparency. This is particularly important for nonprofits that need to track restricted and unrestricted funds with precision.

Key benefits

• Automated fund separation ensures restricted and unrestricted funds are clearly defined, improving reporting accuracy.
• Grant expense tracking allows you to monitor and categorize expenses related to grants easily.
• FASB-compliant reports generate financial statements that meet regulatory requirements.
• Budget forecasting helps predict future financial needs, aiding long-term planning.
• Audit-friendly features simplify the auditing process, saving time and reducing errors.

Drawbacks

• The platform can be difficult to operate without proper training, which may require additional time and resources.
• High costs could be a barrier for smaller nonprofits or those with limited budgets.
• Performance issues can arise when handling large datasets, potentially affecting workflow efficiency.

‍

Nonprofit+ is ideal for larger nonprofits or organizations with complex financial needs that require an all-in-one software solution for financial management. It is best suited for growing nonprofits.

3. Aplos: Best for fund accounting

Aplos is a cloud-based fund accounting software that is designed to help you manage the unique financial needs of your organization. This includes tracking restricted donations and grants and generating financial reports. Aplos focuses on fund accounting and donor management, helping you stay transparent and organized.

‍

With Aplos, you can easily categorize donations, manage campaigns, and create real-time reports. It’s simple to use, so you can focus more on your nonprofit's mission.

Key benefits

• Donation categorization helps you track donations by donor and purpose.
• Custom reports give you tailored financial insights for specific projects or campaigns.
• Fund accounting ensures restricted gifts are managed correctly.
• Custom bank account charts allow you to organize finances with flexible tags.
• Easy setup and integration save you time during implementation.

Drawbacks

• Customer support lacks screen sharing options for better collaboration.
• Cost may be too high for smaller nonprofits.
• Limited tagging for detailed reporting.

‍

While Aplos may be costly for some, its user-friendly setup and targeted features make it a solid choice for organizations with complex financial needs.

4. Xero: Budget-friendly accounting software

Xero is cloud-based accounting software that makes managing finances easier for small nonprofits. It helps track donations, manage expenses, and create reports that save you time while reducing mistakes. Its AI-driven reconciliation and cloud-based features make financial tasks simpler, so you can focus on your nonprofit's mission.

‍

Xero is also great for teams. Since it’s cloud-based, everyone can access the same data, making collaborating with volunteers, staff, and board members easier.

Key benefits

• Payment processing makes it easy to accept online donations using various methods.
• Expense claims help you track and manage spending efficiently.
• Bank reconciliation ensures your financial records are accurate and up-to-date.
• User-friendly invoice templates streamline billing and donation processes.

Drawbacks

• Xero does not integrate with all bank types, which could pose challenges for some nonprofits.
• Price hikes over time may affect budget-conscious organizations.

‍

Xero is a cost-effective and easy-to-use tool for small nonprofits. It helps you manage finances, track donations, and stay on budget.

5. FreshBooks: Great for expense tracking

FreshBooks takes the complexity out of tracking donations, managing projects, and overseeing expenses. Its user-friendly platform helps small nonprofits stay organized and on top of their finances without requiring an expert accountant.

‍

FreshBooks’ time tracking and expense management features are especially useful for nonprofits focused on service-based activities. You can easily track billable hours for specific projects or fundraising efforts, ensuring you’re billing accurately or managing volunteer hours effectively. FreshBooks also helps with donor reporting and generating financial insights, which are essential when maintaining transparency with stakeholders and funding partners.

Key benefits

• Time tracking lets you easily log billable hours, which is ideal for tracking project-related donations.
• Expense management makes tracking regular and one-time expenses simple for clearer budgeting.
• Invoicing with customizable templates ensures smooth donation processing and timely follow-ups.
• Project management features allow you to track fundraising campaign budgets, tasks, and deadlines.
• Reporting and analytics give you insights into financial health, including profit and loss and tax summaries.

Drawbacks

• Customization options are limited and may not meet the needs of all nonprofits.
• The platform can be expensive, especially for smaller organizations with tight budgets.

‍

FreshBooks is an excellent choice for small nonprofits needing a simple yet powerful tool to manage finances, track donations, and handle project budgets.

6. Budgyt: Best for accurate budget management

Budgyt is a cloud-based financial budgeting platform designed to replace spreadsheets. It helps you automate tasks like budget consolidation and cash flow forecasting, allowing you to minimize human effort. Reducing reliance on complex formulas helps your finance team stay organized and focus on decision-making rather than data entry.

‍

Budgyt’s real-time data consolidation allows you to easily track spending, manage multiple budgets, and generate financial reports quickly. This is particularly valuable for nonprofits, where accurate reporting is key for transparency and donor relations.

Key benefits

• Custom APIs to integrate data from other management software systems, streamlining workflows and reducing manual entry.
• Multi-P&L budgeting to consolidate budgets across departments or programs for easier tracking and analysis.
• Data visualization with interactive dashboards to view and interpret financial data.
• Real-time data consolidation for up-to-date insights into your nonprofit’s financial health.

Drawbacks

• Budgyt comes with a steep learning curve, which may require extra training for new users.
• It requires the manual import of payroll and accounting data, which can slow down the workflow.

‍

Budgyt is an excellent choice for nonprofits that need to streamline budgeting and financial forecasting without the complexity of traditional spreadsheets.

How to choose the best accounting software for your nonprofit

Without the right accounting software, you risk manual errors, missed deadlines, and mismanagement of funds, which can harm your organization’s reputation and financial health. To avoid these risks, it is important to carefully evaluate your nonprofit’s needs and select software that is tailored to your specific financial management requirements.

‍

• Size and complexity of your nonprofit

Small organizations with straightforward financial needs may not need complex software. However, larger nonprofits with multiple departments, donors, or funding sources will benefit from software with advanced features like fund tracking, grant management, and multi-department budgeting.

‍

• Ease of use

Nonprofit teams often have limited resources and technical expertise. Choose intuitive and easy-to-navigate software so your team can get up to speed quickly. An accounting system that is easy to use will save you time and reduce errors, helping you stay focused on your mission.

‍

• Real-time reporting and budget forecasting

Tracking donations, managing expenses, and adjusting your budget in real-time are key to staying on top of your nonprofit’s finances. Look for software that helps you create detailed reports and provides budget forecasting tools to project future financial needs, helping you make informed decisions.

‍

• Donor tracking and compliance features

Nonprofits need to stay compliant with IRS regulations and provide transparency to donors. Look for software that tracks restricted and unrestricted funds, generates FASB-compliant financial reports, and helps manage donor records. Automation of these tasks will save you time and ensure you're always up to date with regulations.

‍

• Cost-effectiveness

Many nonprofits operate on tight budgets, so it's important to choose software that aligns with your financial situation. Consider pricing plans, whether the software offers a free version and any hidden fees for add-ons or upgrades. Be sure to weigh the total cost of ownership, including any support or training fees, to make sure it fits within your budget.

‍

Not all accounting software will have every feature you need, such as real-time reporting or automated expense tracking. In such cases, you can leverage Ramp’s Integration feature to seamlessly connect it with your existing accounting software. This way, you can avoid the hassle of switching to a completely new system while also reducing manual errors and saving time.

Make smarter financial decisions with the right nonprofit accounting software

With the right accounting software, your nonprofit can make data-driven decisions that optimize spending, improve fundraising efforts, and maximize impact. By streamlining processes like expense tracking and reporting, you can identify areas for improvement, ensuring that resources are allocated efficiently and in line with your mission.

‍

Moreover, accounting software keeps your organization audit-ready. It simplifies compliance, reduces the risk of financial mismanagement, and ensures you meet IRS and donor reporting standards. These features not only protect your nonprofit but also build trust with stakeholders.

‍

By automating manual tasks and providing clear financial insights, you can focus more on fulfilling your nonprofit's mission and achieving long-term sustainability.

‍

If your accounting software is lacking some critical features like automated expense tracking or reporting, consider accounting automation platforms like Ramp, which integrates seamlessly with standalone accounting systems to provide these functions. This way, you can ensure that your nonprofit has the tools it needs to make smarter financial decisions and maintain efficiency.