Nonprofit bookkeeping: the document checklist

The structural difference is fund restriction. Money arrives with strings, and the books have to prove those strings were honoured. That makes several documents essential that have no equivalent in commercial bookkeeping: grant agreements, donor restriction letters, board minutes approving budgets and designations.

The second difference is in-kind contributions. Donated goods, services and use of facilities have real accounting treatment and almost never arrive with paperwork attached.

Request every month

Programme-level coding means documents need to arrive with programme or fund information attached.

• Bank statements for every account, including any restricted or reserve account
• Credit card statements
• Donation reports from every giving platform, split by restriction and by fund
• Grant payment schedules and receipts against each award
• Vendor invoices and receipts, coded by programme or fund
• Payroll reports with any allocation of staff time across programmes or grants
• Fundraising event income and expense detail, gross
• In-kind donation records — what was received, from whom, and an estimated value
• Investment and endowment statements if applicable
• Membership or programme fee income reports
• Board minutes for the period, or at least any that approve spending or designations

Request quarterly or annually

• Per grant: the full award letter or agreement, including reporting requirements and the period of performance.
• Quarterly: grant reporting and any drawdown requests filed.
• Annually: Form 990 supporting schedules, functional expense allocation basis, and the board-approved budget.
• Annually: donor acknowledgement letters issued.
• Annually: audit or review paperwork if the organisation meets the threshold; W-9s and 1099s for contractors.

Ask before you onboard

These are the questions that decide whether you have priced the engagement correctly. Ask them on the first call, not in month three.

• How many restricted funds or grants are currently active?
• Does the CPA prepare a functional expense allocation, and on what basis?
• Is the organisation audited, reviewed, or neither?
• Who is authorised to approve spending, and is there a board policy?
• Which giving platforms are in use, and do fees come off before deposit?
• Are there in-kind donations, and have they been recorded before?
• Is there an endowment or investment account with restrictions?
• Who files the 990, and what do they need from me?

Traps that catch bookkeepers new to nonprofits

All revenue in one bucket. Without net asset classification — with and without donor restriction — the financial statements cannot answer the question the board is actually asking. Set the structure up before the first month, not after.

In-kind services valued wrongly. Donated services only get recorded when they meet specific criteria — broadly, specialised skills that would otherwise have been purchased. Donated goods are treated differently again. Do not book a pro-bono service at standard rates without checking the treatment with the CPA first.

Conditional grants recognised too early. A grant with a barrier the organisation has not yet met is not revenue yet. Recognising the full award on receipt overstates the year and creates a painful restatement.

Fundraising events netted. Gross revenue and gross expense both belong in the books. Netting them hides the true cost of fundraising, which is a figure the 990 asks about directly.

Missing board minutes. Minutes are the audit trail for designations, budget approvals and unusual spending. They are also the document clients most reliably forget to send — put them on the monthly checklist.