Accounting software for charities: requirements, features, and how to choose in 2026

Choosing accounting software for charities is very different from choosing a bookkeeping tool for a small business. The question is not “Can we enter transactions?” but “Can we prove every dollar was used the way donors and grantors intended, with minimal manual work?”

This article gives you a requirements checklist and workflow lens to evaluate tools. For the full landscape and feature explanations, start with our charity accounting software guide. If you’re already comparing vendors, head to best charity accounting software.

What makes charity accounting different?

Restricted vs unrestricted revenue

Charities must separate funds that can be used freely from those tied to a purpose or grant condition.

Program vs overhead reporting

You need to report impact by program, not just overall profit/loss.

Grant funding rules

Grants bring timelines, cost eligibility rules, and reporting formats — all of which depend on accurate tracking.

Accountability to donors and boards

Transparency is not optional in the nonprofit sector. Audit trails and clean reporting are expected.

Charity accounting software requirements checklist

Use this as your evaluation baseline.

Fund accounting and tracking

Your system must allow coding by:

• fund (restricted/unrestricted)
• program/project
• campaign or grant
  This requirement is highlighted across charity-software selection guides.

Grant management and compliance

You should be able to:

• assign expenses to grants
• track budget burn
• produce reports without spreadsheets

Donation and pledge handling

Look for:

• recurring gifts/pledges
• restriction assignment
• donor-fund allocation reporting

Program-based budgeting

Budgets by program/fund and the ability to report budget vs actual at that level are crucial.

Reporting for boards and funders

Expect:

• fund statements
• program summaries
• grant utilization reports
• audit-friendly exports

Audit trails and internal controls

Permissions, approval workflows, and immutable logs reduce audit risk.

Multi-entity or multi-chapter support (if applicable)

Growing charities often need consolidated reporting.

Integration ecosystem

Nonprofit guides stress integrations with fundraising/CRM, payroll, and expense tools.

Ease of use for non-finance staff

Programs leaders, fundraisers, and approvers need simple experiences, not accounting jargon.

Key workflows your software should support

Donation intake → allocation to funds

A donation should flow from receipt to fund assignment automatically, not via manual journals. (See the full feature logic in charity accounting software.)

Grant award → spending control → reporting

The software should let you lock eligible accounts, approve spending, and run real-time compliance reports.

Expense approvals and policy enforcement

Approvals by fund/program prevent accidental misuse.

Month-end close and reporting packs

Close faster by automating:

• bank recs
• payment matching
• recurring allocations
• board pack generation

Year-end audit preparation

Audit readiness depends on clean trails and consistent coding.

How to evaluate tools for your charity?

Define your size and complexity

A $250K local charity has different needs than a multi-fund foundation.

Build a shortlist

Use the checklist above to narrow to 3–5 tools. Our rankings in best charity accounting software can accelerate this step.

Run scenario-based demos

Ask vendors to show:

• restricted donation reporting
• a grant compliance report
• a program budget vs actual dashboard

Score with a simple matrix

Rate each tool against your non-negotiables and “nice to haves.”

Best-fit recommendations by charity profile

Small charities

If you have:

• simple funds
• low transaction volume
• limited grants
  You may do fine with free or low-cost systems. Start with free charity accounting software.

Growing multi-program charities

When programs expand and restriction tracking becomes frequent, you need deeper fund accounting and reporting. Decision support lives in the charity accounting software hub.

Large or multi-entity charities/foundations

You likely need ERP-level structure, workflows, and consolidated reporting.

When to move from accounting software to ERP?

Consider ERP when:

• fund or grant structures become multi-layered
• approvals and controls need automation
• integrations multiply
• reporting time becomes a bottleneck
  (See ERP pricing tiers in the pillar hub.)

How Gestisoft helps charities implement the right system?

Gestisoft supports:

• requirements discovery
• fund/program design
• data migration planning
• Business Central configuration
• training and change management