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Nonprofit Chart of Accounts: Samples and How to Get Started

    

7 min read

Accounting services for nonprofits

Just four financial reports are required for nonprofit organizations: the statement of financial position (balance sheet), statement of activities (income statement), statement of cash flow, and statement of functional expenses. Notably absent is the nonprofit chart of accounts. While this financial report is not required, maintaining a chart of accounts is highly beneficial to your organization, its management, its operation, and its oversight by the board of directors.

Key Takeaways

What Is a Nonprofit Chart of Accounts?

A chart of accounts (COA) is a list of general accounts where each is broken down into categories to help nonprofit leaders monitor the financial position of an organization. The chart of accounts does not track specific transactions. Instead, it keeps track of the general organization of the nonprofit's assets, liabilities, expenses, income, and equity accounts.

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Why Your Nonprofit Needs a Chart of Accounts

At a glance, the structure provided by the chart of accounts simplifies the accounting process and makes it easier to understand how the NPO's finances are organized. Additionally, it provides a framework for organizing expense and revenue categories within the nonprofit's accounting software system. 

A chart of accounts is beneficial for the organizational structure it provides to your nonprofit's finances. With a chart of accounts, it is simpler to understand your nonprofit's finances, generate reliable financial reports, and establish internal controls. 

How to Set Up a Nonprofit Chart of Accounts

Include the Four Elements of a Chart of Accounts Table

A chart of accounts is typically represented as a table with the following four columns:

  • Account Number - See more on the numbering conventions for creating and organizing account numbers below.
  • Account Name - Each account must have a simple name that is easy for outsiders (and board members) to understand. We recommend including separate accounts and subcategories for each of your nonprofit's events and programs. You can then include even more specific categories within those for things like tickets, auctions, and sponsorships.
  • Category Type - Each organization has the same basic categories in their chart of accounts including assets, liabilities, net assets or equity, revenue, and expenses. 
  • Description - The description further qualifies the account, explaining where each category of funds is coming from or going to. These descriptions can be helpful reminders to you, your board of directors, your accounting team, and external constituents such as foundation representatives. 

Read More: Why Isn't My Nonprofit Successfully Raising Money?

Understand Nonprofit Chart of Accounts Numbering Conventions

There is no standard numbering convention for a chart of accounts that is required for all organizations to use. This provides flexibility for nonprofits to develop a numbering system that works for their own needs. Typically, a chart of accounts uses account numbers to delineate one category of accounts from another. For example, a basic numbering system for a nonprofit's chart of accounts could be defined as follows:

  • 1000 Accounts - Assets
  • 2000 Accounts - Liabilities
  • 3000 Accounts - Net Assets or Equity
  • 4000 Accounts - Revenue
  • 5000 Accounts - Expenses

However, if your organization has several accounts in each category type, you can create a larger spread, such as 4000 to 6000 accounts for revenue and 7000 to 9000 accounts for expenses. 

You can then use the numbering system to create subcategories within the primary categories of accounts, for example:

  • 5100 - Program Costs
  • 5110 - Program Supplies and Materials
  • 5120 - Third-party program contractors and professional services
  • 5200 - Employee Salaries and Wages
  • 5210 - Employee Benefits
  • 5220 - Payroll tax

Read More: Why Your Nonprofit Needs a Sustainer Program (And How To Get Started)

Consider Your Reporting Structure and Relationships Between Accounts

When creating your chart of accounts, consider the structure of your nonprofit's finances. For example, if you rely heavily on grants or events for fundraising, then you will want to create room for plenty of grant or event accounts. Additionally, you'll want to be able to break down those accounts into subcategories and accounts. 

Start by creating the primary account types within each category, then go through those to add in subcategories and accounts to create a hierarchical structure. 


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Integrate Your Accounting Software

To automate the framework and categorization outlined in your chart of accounts, you'll need to customize your accounting software. Both QuickBooks and Sage Intacct have customization features and workarounds that allow you to create the categories you need for properly categorizing and tracking your nonprofit's finances. 

Leave Room for Growth and Change

When creating your chart of accounts, it's important to remember that your organization is going to grow and change in the future. Be sure to leave plenty of room for adding accounts and do not be afraid to remove or change accounts that are no longer relevant to your nonprofit. 

What Does an NPO Chart of Accounts Look Like? Sample Nonprofit Chart of Accounts

Every organization's chart of accounts looks different. The account numbers, account number ranges, account names, breakdowns of each account category, and account descriptions will vary based on the nonprofit's structure and needs.

The following chart of accounts can provide you with a basic example that you can use to structure your own.

Account #

Name

Type

Description

Assets 1000 Account Numbers

1100

Savings

Assets

Balance in savings account

1200

Checking

Assets

Balance in checking account

1300

Investments

Assets

Dollar amount invested

1400

Accounts Receivable

Assets

Money due in invoices

1410

Pledges Receivable

Assets

Money due from pledges

1420

Grants Receivable

Assets

Money due from grants

1500

Equipment

Assets

Value of equipment owned

1600

Property

Assets

Value of property owned

1700

Loans Receivable

Assets

Money due in notes and loans

1800

Petty Cash

Assets

Amount of cash on hand

Liabilities 2000 Account Numbers

2100

Accounts Payable

Liabilities

Money owed to vendors/suppliers/contractors

2200

Accrued Salaries

Liabilities

Money owed in employee wages

2300

Accrued Benefits

Liabilities

Amount due for employee benefits

2400

Accrued Payroll Taxes

Liabilities

Amount owed in payroll taxes

2500

Deferred Revenue

Liabilities

 

2600

Accrued Property Taxes

Liabilities

 

2700

Loans Payable

Liabilities

 

2800

Line of Credit

Liabilities

 

Net Assets or Equity 3000 Account Numbers 

3100

Unrestricted Net Assets

Net Assets

 

3200

Permanently Restricted Net Assets

Net Assets

 

3300

Temporarily Restricted Net Assets

Net Assets

 

Revenue 4000-6000 Account Numbers

4100

Individual Contributions

Revenue

 

4200

Corporate Contributions

Revenue

 

4300

Legacies and Bequests

Revenue

 

4400

Federal Grants

Revenue

 

4500

State Grants

Revenue

 

4600

Local Grants

Revenue

 

4700

Foundation Grants

Revenue

 

4800

In-Kind Contributions

Revenue

 

5100

Program Service Fees

Revenue

 

5200

Membership Dues

Revenue

 

5300

Investment Revenue

Revenue

 

5400

Event A

Revenue

Total revenue generated by event A

5410

Event A Ticket Revenue

Revenue

Revenue generated by event A ticket sales

5420

Event A Auction

Revenue

Revenue generated at event A's auction

5430

Event A Sponsorships

Revenue

Revenue generated by event A sponsorships

6100

Net Assets Released From Restriction

Revenue

 

6200

Unrealized Gain

Revenue

 

6300

Miscellaneous Revenue

Revenue

 

Expenses Account Numbers 7000-9000

7100

Salaries and Wages

Expenses

Staff compensation

7110

Payroll Taxes

Expenses

 

7120

Health Insurance

Expenses

 

7130

Retirement Benefits

Expenses

 

7200

Program Expenses

Expenses

Costs directly associated with programs

7210

Professional Services for Programs

Expenses

Consultants and contractors

7220

Program Supplies and Materials

Expenses

Cost of materials and supplies used in programs

8100

Office Supplies

Expenses

 

8200

Rent/Mortgage Payment

Expenses

 

8210

Utilities

Expenses

 

8220

Real Estate Taxes

Expenses

 

8230

Equipment Purchase/Maintenance

Expenses

 

8300

Travel

Expenses

 

8400

Fundraising Cost

Expenses

Costs related to fundraising

9100

Fixed Asset Purchases

Expenses

 

9200

Payment to Affiliates

Expenses

 

 

Nonprofit Chart of Accounts, Board Reports, Management Accounting, and More

What Outsourced Accounting for Nonprofits Can Do for You

Developing a nonprofit chart of accounts can feel overwhelming at first, but creating a chart of accounts is one of the first steps to getting your nonprofit's back office in order. A chart of accounts will help you improve the organization of your back office and standardize your bookkeeping and accounting processes. 

If you are overwhelmed by the process of creating a chart of accounts, then your nonprofit will benefit from outsourced accounting services. Outsourced accounting for nonprofits is designed to help you organize your back office and leverage your financial data to strengthen your NPO and further your mission.

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