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.

As churches try to become better stewards of the finances entrusted to them they are turning to technology to help them out. There are many church management software packages out there that will help churches manage their membership, events, and finances.

Managing church finances is important for a couple of reasons: (1) members work hard to earn money and they give it to the church in good-faith, and (2) money donated to the church can be deducted for tax purposes. If the money is not managed wisely and donors do not receive a donor statement saying how much they contributed at the end of the year, it becomes more difficult for donors to claim the deduction.

Good church donation software packages will help your church manage the different types of donations easily. For example, if a donor sends in a general contribution that can be used for anything, then the donation software categorizes this as unrestricted. However if a donor sends in a contribution-specific donation then the software will categorize the contribution as temporarily restricted. Once the contribution requirements have been met you can move the assets from temporarily restricted to unrestricted at the click of a button.

Another great use of church donation software is the automation of the donor statements at the end of the year. Churches generally send out an official statement at the end of the year to all of those who contributed during the year. The members then use this official statement to receive a deduction for tax purposes. Money donated to churches is tax-exempt. The creation of the letter for hundreds of different donors can be burdensome. However, donation software can quickly perform this process for you. Simply pull up the list of donors and select print donor statements.

Donation software for churches can be used to generate other handy reports. For example you can use it to show leadership how the church is progressing towards its goals and how the church administrators are doing with their budget. Any time during the year you can quickly pull up a report on how much money any given donor has contributed.

Church financial administrators need to guard donations closely. This money has been worked for and given without regret. In addition this money can be deducted for tax purposes spurring some contributors to give even more. Church donation software makes managing this process much easier.

A church just like a business needs to account for its finances. However the purposes of a church are vastly different than that of a business. While a business is focused on making money, a church is focused on 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.

Welcome to the Church Accounting Software Guide. In order to better serve you, I’ve decided to start letting you email me directly with your questions about what type of software will work best for your church or non-profit organization. For those of you who are new to this whole idea of church or non-profit accounting and are feeling a bit overwhelmed, feel free to email me as well. I can provide you with some resources to get you started.

It’s pretty simple. You email me information about your church (see below for more details on what information you should include) and I email you back with the software package(s) that will be the best fit for your church or non-profit.

For first time visitors to this site, I suppose I should explain who I am so you realize you are getting informed advice. My name is Nate Waddoups and I have a Bachelors and a Masters degree in Accountancy from a religious school (which also happens to be ranked in the top 5 best accounting schools). In addition to my training in school I’ve spent three years working directly in the church finance trenches—of course my church would ask me to manage the finances because of the accounting degree.  I’ve done hours and hours of research and experimenting with the different church accounting or management packages available. The truth is most of the software packages available are pretty good, but they all have different features and depending on what your needs are you may or may not need all of these features.

For those of you who want some help, send me an email at churchaccountant@gmail.com and give me some basic information about your church. I’ll get back to you with my recommendations within 24 hours (unless it’s a weekend).

Below are some items you might want to share in your email.

Number of Members in Your Church:

Number of People Managing your Church’s Finances:

Experience of People Managing your Church’s Finances: Do they understand basic accounting principles? Do they know anything about accounting for non-profits?

Does your church already have an accounting system in place? If so, which one?

Are you looking for software to manage membership? Or do you just want a church financial software package to manage contributions?

Feel free to send me any other information you think will be helpful.

Always remember that church donations are sacred and should be managed carefully. In addition you’ll need to be in conformance with IRS section 501(c)(3) to be tax-exempt. The right church accounting programs will help you be in compliance. Note that software does not take the place of a licensed tax CPA or lawyer.

Over a year ago I wrote a post about using QuickBooks for church accounting. Since then some things have changed and I would like to write about some of those items here. For those of you who didn’t know that QuickBooks can be used for churches, surprise! The truth is QuickBooks is one of the most popular, if not the most popular, church accounting programs available.

QuickBooks has a nonprofit version. Unfortunately there site doesn’t advertise it well in my opinion. You go to the premier version and then you have to toggle an option to nonprofit. This nonprofit version has certain features that make it easier to use than QuickBooks Pro.

Can I use QuickBooks Pro for my church or nonprofit or do I need the Premier Nonprofit Version?

The answer to this question depends on your current expertise in accounting. The Premier version costs about $150 more than the pro version for a single user edition. Note that most small churches will only need a single user edition (it doesn’t mean that only one person can use it, it means that only one person can access the data at a time).

The main advantage of the nonprofit version is that it comes preprogrammed for nonprofits. This leaves a lot less room for your church clerks to make mistakes. Now, if you are already have a deep understanding of QuickBooks and you don’t mind customizing it a bit, then QuickBooks Pro may be the better option for you.

Some critics of the nonprofit version have said that the pro version simply changed “customers” to “donors” and “invoices” to “pledges.” While this is partially true there are some other advantages to the Non-Profit version.

• The Non-Profit version has a chart of accounts is preinstalled that is based on the Form 990 for nonprofits.
• The Non-Profit version comes with a sample nonprofit organization already set up and running. You can use this sample to understand how fund accounting works. This can be a real lifesaver to people who are new to fund accounting or QuickBooks.
• The Non-Profit version allows for more intuitive donation and contribution tracking
• Finally, the Non-Profit version comes ready to provide reports and letters specifically for non-profits. Remember that financial statements for nonprofits are quite different than their for-profit counterparts.

One advantage of QuickBooks over other types of church accounting software is that a lot of people are familiar with it. Even if your congregation is small, you might be surprised that someone has had at least a little experience using it. QuickBooks is fairly user friendly.

If you are looking to save your church some money note that if you follow any of the QuickBooks links on my website you will get 20% off.

QuickBooks is Customizable and Easy to Use. Save up to 20% + Free Shipping Now.

One resource that I would highly recommend for those churches that are new to QuickBooks or new to NonProfits is “Running QuickBooks in NonProfits” by Kathy Ivens. You can find the book at Amazon for around $20. This book is a great resource on using both the NonProfit and Pro version for churches.

Still have more questions about using QuickBooks for churches? Place a comment below so I can answer it and other people will benefit from reading it as well.

The Good

Experience. This group has been doing accounting software for churches for a long time, since 1987. That is before the Internet was even being used on a mass-level. This means that their product has had the time necessary to work out any quirks that so often come with new software. It also means that a lot of people know how to use it and there will be good forums and self-help guides available.

Another great thing about Church Windows is that it comes as a complete package or as individual modules. Buying individual modules can be extremely difficult if you don’t know what you’re doing. A lot of church accountants have no idea what it is they need for their accounting system. For these people it is nice to buy a complete package and know they are getting everything they will need.

On the other hand it is nice for those people who are only looking for a specific feature such as membership tracking, payroll, or accounting to be able to just buy the individual module they need. These people can save a lot of money and confusion by not going with the whole package.

Pricing: This is probably not Church Window’s greatest strength, but it is a strength nonetheless. Depending on exactly what you need, you might be able to find a cheaper option. However, usually when you pay a little more, you get a little better quality. Overall this software is priced very competitively.

Classes: Church windows is a pretty intuitive program; however, to get its full use you may want to take some of the classes they offer online. The fact that they even offer these classes is a huge bonus. A lot of people end up buying expensive accounting software for their church and end up not really knowing how to use it.

The Not So Good

I should probably qualify this with the fact that I’m easily bothered by website checkout processes. A lot of the time I wondering what products I’m getting and at what price. I’m also often left wondering what I’ll be paying for shipping. Some people say that if you have questions you should call them; well, I for one don’t want to call them. If I wanted to chat with someone then I wouldn’t be shopping for the church accounting software on the Internet.

With that introduction, I must admit I was confused by the Church Windows check-out process. Take a look at it below.

Church Windows

I’m not sure how much you can see from this picture, but let me explain why it bothered me. First of all at the top it says “Standard Integrated Packages” $695. At this point, I’m wondering what I’m getting for the $700. After thinking about it a while, it looks like I’m getting the membership and contribution software, but that wasn’t readily apparent to me.

Now, at the bottom of the picture you will notice they are offering additional options. These always make me nervous because I have no idea if I need this stuff. This one made me especially nervous because it has Accounts Receivable (add $150). At this point I’m thinking, “Wait a minute, isn’t accounts receivable part of Accounting?”. Then I really start wondering what comes in the accounting package. Is it missing something else that I might really need?

One thing that rubbed me a little the wrong with with Church Windows was the fact that they make you pay for the online classes. I realize that customer support isn’t cheap, but a lot of companies these days will offer free pre-recorded classes for people who buy their products.

Church Windows also charges what is called a support fee. This is pretty standard amongst software providers, but it is something you should really know about before purchasing your church accounting software. Basically you have to pay $100-400 a year in order to get all of the latest updates and be able to call them when you have questions. Again, I realize that customer service isn’t cheap, but some customers may be annoyed having to pay $400 a year just to keep the software working correctly.

In review, Church Windows is a reliable software that has been around for quite a while. Like most quality products, they have lots of customer support. They also have a great option that will allow you to buy one module or a complete package. Their check-out process is a tad confusing and they will try to hit you up with customer service fees (gotta stay in business somehow). Overall a product that you can’t go wrong with, if you have the money.

The sheer amount of technology offered by ACS can be overwhelming. Although they used to be completely focused on church software, they are now expanding into schools and daycares. They also have a pretty nifty tool called “The Extend Platform” for creating a website and an online community for your church.

In order to give a focused review of ACS’s software as used for church accounting, I had to push aside all of the extras and look how it holds up for accounting purposes. Without further adieu:

Usability

This software has a lot of features that I really like. One of its best features is the ability to generate reports. If you have been consistently entering in your church’s financial information, then you can select the period of time you are interested in and ACS will automatically generate the report for you. You can customize the reports so that they have the information you need.

Another feature that comes in handy is the ability to export your information to excel. While this feature will not benefit everyone, it should help appease the multitude of excel lovers in the world.
ACS’s user interface shows both the name and the number of the chart of accounts. This comes in handy if you are like me, and don’t want to memorize a massive list of numbers. Let me show an example for clarity:

ACS Church Accounting Software

This example also shows you what the software looks like. If I had one complaint about the usability, it would be the visual appearance of the user interface. As you can see from the image above, the grey and white color scheme is reminiscent of the early 90’s when computers were just taking off. I guess I just have to remind myself that I’m an accountant and I’m supposed to be boring.

Compliance

A lot of churches, especially newer churches, are concerned about being in compliance with the IRS and in some situations the FASB. ACS accounting software will help you to be compliant with both of these government organizations. That being said, software alone, can never guarantee compliance. Making sure you are in touch with a CPA (Certified Public Accountant) is very important as you work to become compliant with governmental organizations.

Price

No review would be complete without talking about price. And you won’t find a price tag easily on ACS’s web page. This is a strategic move by the company. Some people prefer to see the price up front so that they can make a quick decision about whether or not the software is even feasible (I fall into this category and was slightly annoyed that ACS didn’t offer any pricing for their church accounting software on their website). When websites don’t disclose the price, I automatically think that the product is going to be very expensive, though I realize this is not always the case.

To ACS’s defense, they offer a wide variety of customized church software. You can’t put a single price tag on a customizable product; that doesn’t mean they can’t give you a range though! It appears that for now, you’ll simply have to call them or meet with a local sales representative to see how much their software would be for your church.

Customer Support

Most people seem fairly happy with ACS’s customer support. Like most businesses, they have an online “Knowledge Base” where you can go for help. These knowledge bases have FAQ’s and a Problem/Solution format that can be helpful. Although the company would probably prefer you spend some time browsing their knowledge base before contacting them directly, you can always call them if you need help.
ACS does not have a 24 hour a day phone service, but their hours are respectable:

Monday –Thursday 9am – 8pm Eastern Time
Friday 9am – 6pm Eastern Time

You can’t really blame them for wanting to leave work at 6pm on a Friday; and many Christians don’t believe in working on Sunday (their Sabbath Day).

If a knowledge base or a phone call isn’t your preferred method, you can also contact the ACS support people through email.

Conversion

I’m not talking about spiritual conversion here, but conversion from your old accounting system to the ACS Church Accounting System. The ACS team will help you convert from your old software to theirs. To my knowledge they do have a setup fee. It has been my experience, that anytime you have to convert to a new accounting software system you are in for a real headache. That being said, ACS does as much as any other company to get you up and running with their new system.

Other Considerations:

I’m not actually a MAC user, but some MAC users have mentioned that they avoid ACS church accounting software because it is not compatible with the MAC. However, ACS does have something called “ACS OnDemand.” Supposedly using this product you will be able to access your financial information using a MAC. Note: You can always try running your MAC on Windows mode while using their Financial Suite software.

This software can be as complex or as simple as you want it. If you only want the software to track your church’s finances, it can do that. If you want it to track membership, attendance, baptisms, etc., it can do that. Keep in mind that the more features you add, the higher the price you will have to pay.

Review/Overall Recommendation

Because my site is not affiliated with any other church accounting software site, I will try to never promote one option over the other. I have tried to give the software as unbiased a review as possible.

Quick Look:
• The Software is user friendly and has been around for a long time
• The Software will help you be compliant with government agencies
• Pricing is a huge question mark as they don’t provide pricing on their webpage (they want to talk with you directly)
• ACS customer support is above average
• Potential problems for MAC Users
• Software is highly customizable, depending on what your church needs

On all my reviews I hope that interested/experienced parties will comment. The comments add a lot to the value of the review and I will update my reviews when needed.

QuickBooks has multiple versions of accounting software. They don’t have any software that is specifically named “Church accounting software.” They do however have a QuickBooks Nonprofit Edition. This version would probably be the best to use for your church’s accounting system, although some churches get away with using normal QuickBooks, known as QuickBooks Pro.

Advantages of Your Church Using QuickBooks

The number one advantage of using QuickBooks NonProfit for your church’s accounting is its ease of use. Many people, even those without much of an accounting background, are able to use QuickBooks effectively. A learning curve does exist, but it isn’t as large a curve as trying to learn a specialized church accounting software system.

Another advantage of using QuickBooks is its customer support. When we mention customer support, we are not necessarily talking about the people at Intuit who designed the software (although they are probably excellent). Chances are you know someone who is already quite familiar with QuickBooks. Imploring them to help you set up and run QuickBooks as your church accounting software might be the best route for your church.

Disadvantages of QuickBooks

**Update** It appears that Intuit has fixed the audit trail problem mentioned below and it is no longer a disadvantage for nonprofits. Several users have even claimed QuickBooks audit trail is among the best: see comment section for further discussion. ***

QuickBooks doesn’t leave much of an audit trail in some situations. If an error is made you can easily reverse what has been done without leaving a trail. For example, let’s say your church accountant accidentally books a donation to the tithing fund instead of the missionary fund. He or she can delete the entry to the tithing fund and switch it to the missionary fund without any sort of documentation.

You may be thinking that being able to easily correct errors is something you want in your church accounting system. The downside of this is that it can be easily manipulated. Most church accounting software requires an adjusting entry when an error is made. This leaves what is called an audit trail so that a church auditor, loan officer, or banker can look back and see any adjustments made throughout the year.

QuickBooks even allows you to change entries made years ago without any documentation or support. A skilled church accountant could easily cook your church accounting books using this software. However, having proper internal controls in place can help limit some of the risk of using QuickBooks as church accounting software.

One disadvantage of using QuickBooks Professional instead of QuickBooks Non-Profit is that it was originally designed for businesses, not churches. Intuit’s non-profit software will make it easy to support your church’s reporting requirements, but QuickBooks Pro. may not support your church’s reporting requirements or terminology. This is especially true if they are not similar to a normal business’s reporting requirements and terminology.

In Review:
• QuickBooks can be used for your church’s accounting
• Advantages include ease of use and great customer support ( a lot of people know how to use this software)
• Disadvantages include it doesn’t leave an audit trail which could jeopardize the trustworthiness of your church accounting system and it may not support your church’s accounting language

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.

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.