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Originally Published: February 2023 | Updated: July 2026
When you have a nonprofit organization to run, keeping up with accounting can feel overwhelming. You need to understand where your money is coming from, how it is being used, and whether your financial activity supports your organization’s mission.
A well-organized nonprofit chart of accounts can make that process easier. It gives your organization a clearer way to classify transactions, review financial reports, track revenue and expenses, and support stronger nonprofit accounting practices for board reporting, grant reporting, and tax filings.
Let’s start with the basics.
A chart of accounts is a list of general ledger accounts grouped by function within an accounting system. It is an organizational tool that breaks financial transactions into categories and subaccounts so the organization can track, report, and understand its financial activity.
Most charts of accounts include five major categories:
Under these major categories, the organization sets up more specific accounts based on how it needs to track and report financial information.
For nonprofits, a chart of accounts helps classify and track revenue, expenses, assets, liabilities, and net assets. The account names may differ from those used by for-profit businesses, but the overall purpose is similar. Each account typically includes an account number, account type, account name, and sometimes a brief description to help users understand where specific financial activity should be recorded.
The users of nonprofit financial reports often include donors, board members, grantors, members, lenders, creditors, and other stakeholders who provide resources to the organization or rely on its financial information.
These users want to understand how the nonprofit manages its resources, supports its mission, and maintains financial stability. They may also want to evaluate whether the organization can continue providing services and whether its leadership is fulfilling its stewardship responsibilities.
A clear chart of accounts helps support these reporting needs by making financial information easier to organize and review.
External financial reporting standards for nonprofit organizations are outlined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).
To meet financial reporting requirements, nonprofits generally need to prepare:
A nonprofit’s chart of accounts should be structured to support these financial statements and help the organization report information clearly and consistently.
To understand how a nonprofit chart of accounts should be structured, it helps to understand how nonprofits are different from for-profit businesses.
Many nonprofit organizations receive revenue from contributions, donations, grants, fundraising events, program service fees, membership dues, and other mission-related sources. They also have natural expenses, such as salaries, rent, utilities, professional fees, supplies, and technology costs.
However, nonprofits also need to track one additional layer of information: functional expenses.
Functional expenses show how natural expenses are used across the nonprofit’s major functional areas. These usually include:
For example, a nonprofit may have salary expenses for employees who work directly on a program. Those wages may be classified as program expenses because they relate directly to fulfilling the organization’s mission. Other salary expenses may relate to administrative operations or fundraising activity.
In QuickBooks Online, the chart of accounts is typically used to track natural expense categories. QuickBooks Classes can also be used to track functional expense categories, such as programs, management and general, and fundraising.
This additional step matters because nonprofit stakeholders often want to understand how much of the organization’s spending goes directly toward programs compared with administrative and fundraising costs.
At year-end, nonprofit financial statements may show the amount and percentage of expenses spent in each functional area. This helps board members, donors, grantors, and other users understand how the organization uses its resources to support its mission.
Form 990, which most nonprofits are required to file, also requires expenses to be reported by program services, management and general, and fundraising categories.
A nonprofit chart of accounts should be detailed enough to support useful reporting, but not so detailed that it becomes difficult to maintain. Subaccounts can help create that balance.
In QuickBooks Online, subaccounts allow related accounts to be grouped under a parent account. This makes reports easier to read while still allowing the organization to track more specific categories of revenue, expenses, assets, liabilities, and net assets.
For example, instead of listing each contribution account separately, a nonprofit may use a parent account, such as Direct Contributions, with subaccounts for individual contributions, corporate contributions, board member contributions, or fundraising event contributions. The same approach can be used for grant revenue, government contract revenue, donated goods and services, salaries and benefits, contract services, facility expenses, and other operating costs.
This structure can be especially helpful for nonprofits because many organizations need to report financial activity to multiple audiences, including board members, donors, grantors, lenders, and tax preparers. A chart of accounts with well-organized subaccounts can make it easier to review revenue sources, understand spending categories, and prepare reports such as the Statement of Activities and Form 990.
The goal is to create a structure that provides the organization with clear, useful financial information without making day-to-day bookkeeping more difficult.
QuickBooks Online allows nonprofits to customize their chart of accounts based on their organization’s structure, funding sources, programs, and reporting needs. However, most nonprofits will need to modify the standard QuickBooks chart of accounts so that revenue, expenses, net assets, and functional categories are easier to track.
Wendroff & Associates has created a nonprofit Chart of Accounts template for QuickBooks Online with a parent account and subaccount structure. The template includes sample accounts for common nonprofit categories, including contributions, grants, donated goods and services, government contract revenue, program revenue, net assets, payroll, professional services, operating expenses, facility expenses, and travel.
You can use this template as a starting point and customize it based on your nonprofit’s programs, funding sources, restrictions, and internal reporting needs.
This sample chart of accounts includes account numbers, parent accounts, and subaccounts to help organize nonprofit financial activity in QuickBooks Online.
In the template, the main account categories are shown in bold blue text. The related subaccounts appear beneath them in regular text. For example, account 3000, Net assets without donor restrictions, is a parent account. Account 3020, Board-Designated Net Assets, is listed as a subaccount under that category.
This structure helps keep the chart of accounts organized while still allowing the nonprofit to track more specific activity within each major financial category.
Here is a simple video on how to import the nonprofit chart of accounts into QuickBooks Online:
Since there are few classes to set up for functional categories, here are the classes we suggest creating for your nonprofit.
Here is a video showing how you would use classes in QuickBooks Online to categorize natural expenses relating to their function:
A nonprofit chart of accounts should be built around your organization’s actual reporting needs. The right structure can help you track restricted and unrestricted funds, understand revenue sources, classify expenses, prepare for Form 990, and create reports that are useful for leadership and board decision-making.
Wendroff & Associates works with nonprofit organizations to improve accounting systems, reporting processes, bookkeeping workflows, and QuickBooks Online setup.
If your nonprofit needs help customizing its chart of accounts or improving its accounting process, contact Wendroff & Associates to schedule a consultation using the Free Consult button below.
