Nonprofit Chart of Accounts Template

A chart of accounts is the list of categories your transactions are recorded against. It is the most consequential setup decision in nonprofit bookkeeping and it is usually made in ten minutes by whoever installed the software.

The reason it matters: your chart determines what you can report. Rebuilding it after a year of transactions means reallocating every one of them, and the moment you discover the problem is usually the week your annual return is due.

The numbering convention

Leave gaps. Numbering revenue accounts 4000, 4010, 4020 rather than 4001, 4002, 4003 means you can insert a new account in the right place later instead of appending it at the end where it makes reports read oddly.

Build it around the Form 990

This is the whole argument of the page. The full Form 990 requires expenses split into programme services, management and general, and fundraising. That split is not optional and it is not something to work out at year end.

So design the chart so the split falls out of it. In practice that means using your accounting software’s tag dimensions deliberately, and deciding on day one what each one means.

The trap is arithmetic. Most general accounting software gives you two structural dimensions and you have three or four things to track. Something has to give, and deciding which, deliberately, in month one, is the difference between reports you can produce and reports you have to rebuild in a spreadsheet.

Revenue accounts worth separating

Organizations under-separate revenue and then cannot answer basic questions.

Recurring giving, separate from one-off individual gifts. These behave completely differently and you need to see monthly donors as a distinct population.

Special events gross, with direct costs in a matching expense account. Showing events net hides the fact that an event grossing $12,000 cost $7,500 to run, which is a conversation the board should have.

Government funding separate from foundation grants. Different compliance, different payment timing, different risk.

In-kind contributions separate from cash. They are recorded differently and they are not spendable.

Net assets released from restriction as its own account. Without it, the release entry has nowhere sensible to go.

Expense accounts people forget

Software will not decide this for you

Accounting packages ship with a default chart and offer a nonprofit variant. Treat both as a starting point rather than an answer.

Several so-called nonprofit charts are business charts with equity renamed to net assets and nothing else changed. They lack the revenue separation nonprofits need, and they do nothing about the functional expense requirement, which is the part that actually costs you time later.

Import a structure like the one on this page, delete what you do not need, and then configure the tag dimensions deliberately. Deleting unused accounts before you begin takes minutes. Restructuring after a year of transactions does not.

How many accounts

Between about twenty-five and fifty for most small organizations, which is roughly what the template provides.

Below about fifteen you cannot see where money is going. Above about eighty, nobody maintains the distinctions and transactions get coded to whichever account is nearest alphabetically.

A useful test for each account: could you explain a variance on this line to your board without opening another document? If not, it is too broad. If a line has been zero for two years, merge it into Other.

One more mapping worth doing early. If you receive government funding, check whether your funder requires a particular cost breakdown or an indirect cost rate, because those requirements sometimes cut across the functional split rather than aligning with it. Discovering that during your first grant report means either a manual reallocation or a negotiation you would rather not be having.

Naming accounts so people use them

A chart fails in practice more often through naming than through structure. If a bookkeeper cannot tell which account a transaction belongs to in two seconds, they will guess, and the guesses will not be consistent.

The first row is worth acting on today if you have one. A miscellaneous account attracts everything the person coding is unsure about, and by the time anyone looks, the balance is large and the composition is unknowable.

Write a one-page coding guide naming what belongs in each ambiguous account, and store it where the next bookkeeper will find it. That page is the difference between a chart that survives a change of staff and one that quietly stops meaning anything.

Mapping it to your annual return

The practical test of a chart of accounts is whether producing your Form 990 is an export or a reconstruction.

Two lines the form separates that organizations often merge. Professional fundraising fees are asked about specifically, so they need their own account rather than sitting inside contract services. And grants paid to other organizations or individuals are reported separately from your own programme costs.

Check your chart against the form itself once, before your first year end. Half an hour then saves a weekend later.

Setting it up, once

Three rules that prevent the expensive version of this.

Start at a fiscal year boundary. Changing your chart mid-year means your comparatives do not line up and your year end is harder.

Write down what each dimension means. One page, stored where the next bookkeeper will find it. Organizations lose this knowledge when a person leaves and then guess for a year.

Have it reviewed once by a nonprofit-experienced accountant. An hour at the start is worth considerably more than the same hour at year end, and it is the cheapest insurance available against a manual reallocation.

Download this template

Free, no email address, no signup. The full text is on this page as well, so you can read it before you download it.

• Nonprofit chart of accounts template Full numbered account list plus a functional expense worksheet XLSX · 9 KB

Questions people ask

What is a nonprofit chart of accounts?

The list of categories every transaction is recorded against, numbered by type: assets, liabilities, net assets, revenue and expenses.

It differs from a business chart in two ways. Net assets replace owner equity and split by donor restriction. And expenses must be capable of being reported across three functions, being programme services, management and general, and fundraising, because the full Form 990 requires that split.

It determines what you can report. Anything your chart does not distinguish, you cannot report on without rebuilding the data by hand.

How many accounts should a small nonprofit have?

Roughly twenty-five to fifty for most organizations under a couple of million dollars.

Below about fifteen you cannot see where money is going, and every variance conversation ends in someone opening a spreadsheet.

Above about eighty the distinctions stop being maintained, and transactions get coded to whichever account looks closest, which is worse than having fewer accounts honestly used.

Test each one: could you explain a variance on this line to your board without opening another document? If not, split it. If it has been zero for two years, merge it.

What are the standard account number ranges?

1000s for assets, 2000s for liabilities, 3000s for net assets, 4000s for revenue, and 5000s and 6000s for expenses. This convention is near universal and following it makes your books legible to any accountant.

Leave gaps between numbers. Using 4000, 4010, 4020 rather than 4001, 4002, 4003 lets you insert a new account in the right position later, rather than appending it at the end where reports read oddly.

Some organizations use 5000s for personnel costs and 6000s for everything else, which is a useful convention since salaries and related costs are usually the largest block.

How do we track restricted funds in our chart of accounts?

Not primarily through accounts. Through your accounting software's tag dimensions, because a restriction cuts across many accounts rather than being one of them.

Most general accounting software gives you two structural dimensions, commonly called class and location, plus projects. The functional expense split required by Form 990 usually takes the primary dimension, restricted funds take the second, and individual grants go to projects.

Decide this in month one and write it down. The arithmetic problem is that you have two dimensions and three or four things to track, and organizations that do not decide deliberately discover the constraint at year end.

Above roughly a dozen restricted funds, purpose-built fund accounting software becomes cheaper than the workaround.

Should we use a nonprofit-specific chart of accounts?

Use a nonprofit structure, whether or not your software offers a preset one.

Software templates labelled nonprofit vary in quality, and several are business charts with a few renamed accounts. The features that make a chart genuinely nonprofit are net assets split by restriction, revenue separated by source in a way that reflects how nonprofits are funded, and expenses capable of the three-way functional split.

Start from a structure like the one on this page, delete what you do not need, and add what your work requires. Deleting unused accounts before you begin is easy. Renumbering after a year of transactions is not.

Can we change our chart of accounts later?

Yes, and time it to a fiscal year boundary if you possibly can.

Adding an account mid-year is harmless. Renumbering, merging or splitting accounts mid-year means your comparatives no longer line up, and your year end becomes considerably more work.

Where a change is genuinely necessary mid-year, decide whether to restate the prior transactions or to note the change and live with a broken comparative. Either is defensible; doing neither and hoping nobody notices is not.

Keep a record of what changed and when. An auditor comparing two years will ask.

What is the difference between a chart of accounts and a budget?

The chart is the structure. The budget is a plan expressed in that structure.

Your budget should use the same account names and numbers as your chart, so comparing actual against budget is a report rather than a reconciliation exercise. Organizations whose budget uses different categories from their books spend a day each month translating between them.

The budget will usually be less detailed, grouping several accounts into one budget line, which is fine as long as the mapping is consistent and written down.

Do we need separate accounts for each grant?

Usually not separate accounts. Separate tracking, through a project or grant dimension.

Creating a new expense account for every grant produces a chart with two hundred accounts within three years, and most of them dormant.

The better structure is one set of expense accounts by nature, with each transaction tagged to the grant it belongs to. You can then report spend by grant, by function, or by account, from the same data.

The exception is restricted revenue. Separating grant income by major funder, or at least by funder type, is worth doing at the account level because you will be asked about it repeatedly.

This is reference information, not legal or tax advice. Rules vary by state and change over time. For a decision that carries real consequences, check the current text at irs.gov or your state registry, and talk to a nonprofit attorney or CPA.