QuickBooks is a popular, low-cost option for nonprofits to manage their accounting, but there are some pros and cons when it comes to the workarounds needed to get reports. Many nonprofits and churches try hard to get QuickBooks Online to work for them – there are entire textbooks dedicated to it! But check out the video above and you’ll see that it’s missing something huge! We do an in-depth walk through how QuickBooks handles tracking designated funds and the steps you take to get to your Cash Balance by Fund, Income Statement by Fund, and Balance Sheet. Plus, we compare this to a true fund accounting software, Aplos Accounting.
So what is it that nonprofit accounting software can do that small business accounting software cannot?
Nonprofit accounting is made specifically to fit the unique needs of organizations that need to track designated money in multiple funds, and pull reports based on those funds to track income and expenses. The ability to do all of this is called fund accounting. With QuickBooks Online and other small business accounting software, there is no way to track income and expenses for designated funds – at least not easily. Instead, all income is dropped into one general fund, then you use a combinations of sub accounts, classes, external spreadsheets, or even separate bank accounts.
True fund accounting matters. It means you will be able to pass your annual audits, be able to produce reports for your board to show money is used appropriately, and assure your supporters you are stewarding your resources in the way they have asked. Unfortunately, QuickBooks does not make this easy.