What makes church accounting so different? Well the main difference is fund accounting. When money is donated or given to a church, the church needs to keep track of it a bit differently than a business would. First of all, a church needs to keep track of member donations for tax purposes. In addition, churches need to keep track of the type of donations in different “funds” or accounts. For example a member may specify that a certain donation is supposed to be used for a specific purpose (this could be for a new church, for missionary purposes, or for an upcoming service project). The church accountants and leaders have to keep track of where the money will be going (to do this, they use funds).

QuickBooks For Churches

Interestingly enough many people don’t know that the most popular church accounting software is QuickBooks. Most new church accountants have heard of QuickBooks before, but they don’t know that Intuit (the makers of QuickBooks) makes a special nonprofit version that works great for churches. You can read more about it in my QuickBooks for Churches review.

Church Management Software

Some people don’t really see a difference between accounting software for churches and church management software. At first, I didn’t really see a difference either, but now that I’ve been writing about and reviewing this software for several years I see some key differences. Management software is designed to manage information about your members. For example you may want to know membership attendance for religious meetings. You’ll probably also need to track personal contact information for each of your members. Sure you could probably keep all of this information in a spreadsheet, but there is software out there that will do all of the hard work for you. Most software will allow church leaders to have a picture of the individual along with all the pertinent information all on one screen. This software can make being a church leader much more manageable.

Example of Church Management Software

Free Church Accounting Software

The old saying goes that “there is no such thing as a free lunch.” Well that’s only partially true. The truth is there are some free church accounting software packages available. However, they aren’t as sophisticated or user-friendly as the software that you can purchase. In addition, they may not have all the requirements to meet your needs.

Non-sponsored List of Church Management Software Providers:

Click on any of the links below to read a review about the software (you’ll also find links to each companies’ website).

Church Windows

This company has been making church software since software started being developed. Okay, maybe not that long, but they have been in the business since 1987. They have the friendliest staff and the best customer service (I’ve dealt with quite a few church software companies and have been really impressed by how I was treated at ChurchWindows). Their software is broken up into 6 modules: Membership, Scheduling, Payroll, Accounting, Contribution, and Accounts Receivable. Initially the separate module idea bothered me, but as I deal with more church leaders I find that they all have different needs.

ACS Technologies

ACS has been in this business for a long time. They provide some very high-quality and flashy software. Probably the thing I like best about ACS is how they cater to different sized churches. They have an option for small churches, medium/large churches, and mega churches. This is very good software. This is a larger company so expect to receive all that comes with dealing with a big company: tried and tested software, but occasionally a small customer might fall between the cracks.

Power Church

PowerChurch is another company that has been providing church management software for a long time. They provide a solid program at a great price. As they like to say they “provide the biggest bang for your buck.”

Servant Keeper

This is an interesting church management system solution. One feature that is particularly intriguing is the option to integrate the management software with QuickBooks. Many people prefer to do their accounting on QuickBooks (because that’s how they’ve always done it). This software allows you to manage your church and contributions using QuickBooks as an extension.

Icon Systems

The people at Icon Systems take church management very seriously. They have a licensed CPA on staff that can answer all of your church accounting questions (accounting is where most church leaders run into problems, usually membership management doesn’t cause as much stress because you don’t have standards and regulations that you are required to follow). IconCMO (the software provided by Icon Systems) is based online. The new trend in technology is to move the software online. This makes it so church volunteers can access the information from anywhere they have Internet access. It also means that your church doesn’t have to worry about the technology headaches that comes with upgrading (the tech experts at Icon Systems take care of all this for you).

ChurchTrac

The idea behind ChurchTrac is to provide a low-cost solution for managing your church. The ChurchTrac software is free for your first 100 members. This is great new for those churches that are just starting out and are on extremely tight budgets.

ChurchTrac has also branded itself as the “easy-to-use” church management system. This means that your church will save money in support costs. Many software companies make their living off of providing difficult software programs and then charging a lot of money for support. ChurchTrac goes the other way; they try to make their software as user-friendly as possible so that you’ll never have to bug them. You can read my full review by clicking on the link above.

More church management software reviews to come…

I would be very grateful if others could provide their experience with these church management software programs. If you have experience with any church management program please write about it below (in the comments section). This will really help out people looking to find programs for their church. You would be surprised at the number of people looking for help. Take a few minutes to serve your fellow man. You’ll be blessed for it!

Please include the following information.

Name of program used:

Years using it:

Approximate size of your church:

Your experience with the software (Did it save you time?) (Was it hard to get up and running?) (Would you recommend it to a friend?) (How user friendly is it?):

Anything else you think will help others who are searching for software to manage their church:

Note: If you work for one of these companies and would like to get your logo placed next to your review, then please contact me.

A contribution to a church is a sacred item and should be managed carefully. The story of the Widow’s mite reminds those of us who are in charge of managing church finances that even the littlest amount is important to the Lord. This means that you should have some form of system in place in order to carefully track these donations.

Typical donations to churches include money and stocks; however, occasionally someone will donate a physical item of value like a painting or an animal. A good church contribution software package can help you keep track of all of these donations.

Why are contributions so difficult to manage?

This is a common question asked by those who are just entering the church accounting scene. From an outsider it would seem pretty simple. The church receives money, makes note of it, and deposits the money in the bank. It seems like by simply monitoring the church’s bank account, one would be able to keep track of all of the donations. Unfortunately managing church contributions is not this simple.

When a donor pledges an asset to the church, he/she will often only do so under certain circumstances. The donor might say that the money can only be used for feeding the poor or rebuilding the old church. Donations like this need to be tracked in a special purpose fund. Unfortunately banks are not willing to keep track of all of this for you. Some people may consider at this point creating two accounts at a bank: one for general funds (donations without any restrictions) and one for special purposes. Problem solved, right? Not exactly because Sue’s contribution was to be used specifically for maintenance of the Church, and John’s contribution was to be used for the summer camp, and Harold’s for the missionaries in Africa. You can see how this quickly spirals out of hand. A good church contribution system will help you keep track of these different donations.

Features included in Church Contributions Software

Not all software packages are created equal but most of them will have the following features: funds setup to help you manage the different contributions you receive, a place to track donor information, reports at the end of the year that summarize how much a donor has contributed, and an automatic letter-generator that will send out a statement to the donor for tax purposes. Depending on the size of your church, the letter-generator can be a real time saver.

Remember that church contributions are acts of faith and should be managed carefully, preferably with some form of church accounting software. Careful management is necessary due to the nature of restrictions with contributions.

making the world a better place and helping people be happy by believing. A business receives money from customers while a church receives money from donors. This last difference causes churches to use something known as fund accounting.

When a business receives money from a customer, the business has complete discretion over how the money will be used—there are no strings attached. However, many times when a church receives money from a donor there are strings attached. The donor will specify how the church can use the money.

Normal accounting software is not setup in a way to track these donor-specified contributions. That is why many church leaders in charge of contributions use church bookkeeping software. This type of software is setup to be able to track the different types of contributions.

Bookkeeping software for churches will help you categorize donations into three general areas: unrestricted, temporarily restricted, and permanently restricted funds. If you receive a general donation from a member (with no strings attached), then you can easily enter the donation into the proper area of the bookkeeping software.

Temporarily restricted funds are probably the most common type of restriction that you will run into at your church. These are usually incidences where donors specify that they want the money to be used towards reconstructing the church building or building the new church baseball diamond. With a good church bookkeeping software package you can easily keep track of all of these contributions as well as their donor-specified restrictions.

Permanent restrictions are uncommon for smaller churches, but they happen often enough in large churches. These are contributions where the member outlays a large principle amount that cannot be used, but the interest on the principle can be used. You can keep track of these types of contributions in the software.

Another benefit of using some form of accounting software designed for churches is that they come ready to print out donor statements and summarized donor contributions at the end of the year. This means you can automate the process of sending out letters to your donors letting them know how much they can deduct for tax purposes. In addition it will help you keep track of who is donating the most and towards what items.

Businesses are very different than churches, but this doesn’t mean that a church should not put emphasis on managing its finances. A good software package can help you do just that.

Most accountants don’t think about church software programs because they eat, drink, and sleep GAAP (Generally Accepted Accounting Principles). If they aren’t enamored with GAAP, then they dream of the IRS Tax Volumes. What about those of us who just need to know about church accounting? The good news is you need not be an expert in GAAP or the IRS code to handle your Church’s accounting.

Back to the Basics

Before accounting became all about following rules and regulations, accounting was used to track key information. This information could be about anything. A farmer may have used accounting to track how much milk his cows were producing. A banker to track the money going in and out. An army general to track casualties. This was accounting in its most beautiful form. So useful, and so uncomplicated. Unfortunately in order to achieve comparability amongst different companies, accounting has become tainted. The numbers have to be squeezed so that they are in accordance with certain standards. They become useless, and this is when accounting becomes GAAP .

Church accountants would do well to remember that the main reason they are doing accounting is to track the useful information of their church. The good news is that you, the church accountant, get to decide what is useful. It may be church attendance, church donations, number of conversions, etc..

Fund Accounting

Churches require fund accounting. To understand fund accounting, it is helpful to understand what the word “fund” means. Fund = a reserve of money set aside for some purpose. Fund does not mean a separate bank account. In fact you can have one bank account with an unlimited amount of funds.

Why do Churches Require Fund Accounting?

When you give your money to Wal-Mart in exchange for goods you have no say over what Wal-Mart does with that money. However, when you give your money to a Church, you can tell them that your money should go towards missionary work, feeding the homeless, or building new churches. In fact, most churches have a missionary fund, a service fund, and a construction fund.

The Need for Church Accounting Software

Once you understand that Wal-Mart’s accounting is different than a Church’s you realize that special software is needed for church accounting. Church accounting software should make fund accounting simple and easy.

We here at The Church Accounting Software Guide want to remind everyone that we do not endorse one software or system over another. We simply want to provide information so that it will be easier for you to choose a church accounting or management system. Today we provide a free review of “Clarity Accounting” –www.clarityaccounting.com

**Update 9/22/2011

It appears that Clarity accounting is now Kashoo accounting. They changed their name for branding purposes. You can still use this software for church accounting purposes, but it isn’t specifically geared towards churches.

First of all, you might note a few good things right from the get go: (1)the website is an http(s) (that “S” is important and means that the company spent the money to be more secure–a good sign (2) they are secured by Geotrust and (3) the website is professional and easy to navigate. If you see these three things on any online website, it is extremely unlikely that you will be scammed.

Next, Clarity offers free church accounting software for 30 days (a demo version). This is a sign that they are confident in their church accounting software. This is the exact opposite of those “miracle weight loss pages” that are 100 pages long, and keep saying that they will tell you the secret to weight loss once you get to the bottom of the page (in the meantime you have to read all their propaganda, usually in the form of success stories). I’m sorry if I’m getting on a tangent here, but I can’t stress this enough, please avoid sites that are all propaganda and offer quick and easy solutions.

Clarity’s 30-day free church accounting software trial is better than most because they don’t require a credit card number before you can use the trial. Many companies give you a free trial, but ask for your credit card number in hopes that you will forget. Once your trial time is up, they start charging you (very annoying).

Functionality

The Good: Keep in mind we were using the demo version as we tested their online software. The software has all the financial accounting information any church would need. The software is very intuitive. When you tell the software to do something, it does! The layout and reports are very aesthetically pleasing.

The Questionable: When I clicked on the graphical reports, it kept sending me to some random web page that hand nothing to do with Clarity Accounting (a little frustrating, but again, maybe this is the demo version).

Keep in mind that this is online church accounting software which comes with the benefits of being able to use it anywhere, but also the security issues that come with online software.

We advise that you do some of your own research before making any purchase of church accounting software but Clarity Accounting appears to be a good product for a low price of $10 a month.

Feel free to sound off on any Church Accounting Products in the comment box.

We’ve said a few times on this site that not all church accounting software is built equally. Some software has more features than you or your church would ever care for, while other software may not have what you need. Be careful when purchasing church software because some software comes in a one package has it all deal while other software only does specific procedures.

Church Management Systems Versus Church Accounting Software

It turns out that some software exists that does just about everything for your church. These software packages are usually entitled “Church Management Software.” These management softwares take care of membership issues (attendance, converts, etc.). They also manage the finances at your church (offerings, taxes, etc.). We’ve even seen some church management software that has features that track upcoming events in your church–choir rehearsals, dinners, and church services.

On the other hand we have seen websites that sell their wares separately. For example they sell what they call a “People Suite” that will keep track of membership or a “Financial Suite” that keeps track of finances. It is important to note that these companies are selling them separately: if you buy the people suite you aren’t getting any financial suite products. This can be compared to buying Microsoft Word separate from Microsoft Excel. They don’t exactly do the same thing.

So our word of caution is to make sure that what your buying performs all of the functions you want it to. We tend to lean towards the One-Package-Does-it-all solutions, but we can see some reasons for buying separately (perhaps better functionality).

Not all church accounting software is built equally. Some software comes with a lot of features and technology while others are more basic. We want to make sure that you don’t buy software that your church’s computers can’t handle so we bring you the following information.

Before you make your purchase, make sure to double, nay triple check to verify that your computer(s) meet at least the minimum requirements for the software. There is nothing worse than spending money on software, returning back to your computer, placing the CD in the computer, and then finding out that your computer can’t handle the software. Please make sure you meet the minimum requirements for any software you buy for your church.

Unfortunately many companies that offer church software fail to place the minimum requirements on their websites. If you find yourself in this situation, then you have three options: (1) Gamble and purchase the software anyway hoping that your computers will have what it takes–not recommended (2) Contact the company via phone or email (3) Go to a different website. Gambling is never recommended

After searching the Internet, we’ve found that most church accounting software requires at least 64-256mb of ram. This may not seem like a lot to some people, but many churches don’t have a big budget to buy top end computers.

We hope we have saved you some time in your quest to purchase church software. Feel free to leave any comments about information you may have acquired.

Accounting for the church’s money is a tough issue. Most church leaders tend to separate the money issue from spiritual issues like praying and attending church. However, it is important to remember that money is necessary to build up the Kingdom.

Because money is sometimes a sensitive area within the Church, it is important to assure that your members’ donations are being accounted for. Church accounting software can help you keep better track of where these donations are going.

You can use church accounting software to give annual or semi-annual statements to your members. Giving these statements increases trust with your members and can lead to further donations. You can also use your church management software to track your expenditures. Most software systems will display this information in a way that will allow you to make better decisions…

Decision making is critical when spending members’ contributions!

Anytime you have information stored online there is some inherent risk. That is not saying that we should avoid putting our information online, but we should always be cautious. Having your church’s accounting system online can be dangerous for a couple of reasons that will be discussed below.

1. Internet Security Issues

A hacker could maliciously enter your online database that contains all of your important church management information and steal or delete the information. We won’t get into the technical jargon of how they might accomplish this, just know that they can.

2. Your Online Software Company Goes Out of Business

If you have your information stored online through one of the many online software systems, then you run the risk of your online software provider going out of business and trashing your data.

We’re not saying we’re completely against having all of your church management data online, but we recommend caution when this information is online. Always have a physical backup of your church accounting software data.