If you run the books for a congregation, you have probably already discovered the uncomfortable truth: QuickBooks Online for churches does not actually do fund accounting. There is no "funds" button. Out of the box, QBO is built for a coffee shop or a contractor, not for a ministry that has to keep a building fund, a benevolence fund, and the general operating budget from bleeding into each other. The good news is that with the right setup, QBO can mimic fund accounting closely enough to satisfy your board, your treasurer, and your auditor — and most churches do not need to buy specialized software to get there.
I have set this up enough times to know where it goes wrong. Below is the practical configuration we use: the right subscription tier, the company settings to flip first, how to build classes that behave like funds, when to reach for projects, and the one report that will tell you whether your restricted money is really restricted.
First, accept what QBO is and is not
True fund accounting software (Aplos, PowerChurch, the old Shelby) keeps a self-balancing set of books for every fund — each fund has its own assets, liabilities, and net assets, and the system enforces that balance. QBO has one general ledger. You cannot make it self-balance by fund without effort.
What QBO can do is tag every transaction with a class, and then report your income and expenses sliced by those classes. If you treat each class as a fund and you are disciplined about tagging, you get a clean Statement of Activity by fund. That is the workaround, and for a church under roughly $2–3M in annual revenue it is usually enough. The discipline is the whole game — sloppy tagging makes the reports lie.
You need QBO Plus (not Simple Start or Essentials)
This trips up almost every church that signs up on its own. Class tracking only exists in QuickBooks Online Plus and Advanced. Simple Start and Essentials cannot track classes at all, which means they cannot do the fund workaround. Do not waste a month on a cheaper tier — start on Plus.
Before you pay retail, check TechSoup's nonprofit QuickBooks program. Registered 501(c)(3) organizations can usually get QBO at a meaningful discount through TechSoup rather than the standard subscription price.
Configure the company file for a nonprofit
Once you are in Plus, flip these settings before you enter a single transaction.
- Set the company type to nonprofit. Go to Settings (gear) > Account and settings > Advanced > Company type and choose Nonprofit organization (Form 990). This quietly relabels your reports: the Profit & Loss becomes the Statement of Activity and the Balance Sheet becomes the Statement of Financial Position — the language your board and any reviewer will expect. (Churches are exempt from filing Form 990 under IRC 6033, but the report formatting still follows that model.)
- Turn on class tracking. Under Account and settings > Advanced > Categories, switch on Track classes. I recommend also enabling "Warn me when a transaction isn't assigned a class" — that single checkbox prevents the most common error, untagged transactions that quietly break your fund reports.
- Turn on location tracking and/or projects if you will need functional expense reporting or campaign tracking (more on this below).
Build your chart of accounts around net assets, not departments
The biggest mistake I see is a church stuffing every fund into the chart of accounts as a separate income or equity line. Don't. Your accounts describe what a dollar is (tithes, facility expense, payroll). Your classes describe which fund it belongs to. Keep those two ideas separate and the whole system stays clean.
On the equity side, structure your net assets to match current accounting standards. Under FASB's ASU 2016-14, nonprofits report just two net asset classes: net assets without donor restrictions and net assets with donor restrictions. The old three-bucket model (unrestricted, temporarily restricted, permanently restricted) is gone. Your equity section should reflect those two categories so your Statement of Financial Position ties out to the standard.
Make classes behave like funds
Here is the core of the workaround. Create one class per fund, and use sub-classes if you need detail underneath a parent fund.
- General / Operating (without donor restrictions)
- Building Fund (with donor restrictions)
- Benevolence Fund (with donor restrictions)
- Missions (with donor restrictions), with sub-classes per missionary or trip if helpful
- Designated accounts the board set aside (these are board-designated, technically still unrestricted — keep them visually separate so you don't accidentally report them as donor-restricted)
That distinction between donor-restricted and board-designated matters more than people think. A gift a donor restricted to the building fund is legally restricted — you cannot spend it on payroll. Money the board chose to set aside for a future roof is unrestricted and the board can re-designate it any time. If you label both "restricted" in QBO, your financials overstate your restrictions and your auditor will catch it. The ECFA publishes solid guidance on honoring donor intent if you want a deeper reference for your board.
Tag every transaction with a class. Income, expenses, and — this is the one people forget — transfers between funds. When the general fund covers a benevolence shortfall, that transfer needs a class on both the "out" and "in" side. If you skip it, the fund balances drift and you will spend an afternoon hunting for the difference.
When one dimension isn't enough: locations and projects
Funds are not the only thing a church has to track. Nonprofit reporting also expects a Statement of Functional Expenses — your costs split across program services, management and general, and fundraising. Here is the constraint: a transaction can carry only one class. You cannot make the class field hold both "Building Fund" and "Program" at the same time.
So you need a second dimension. In QBO Plus you have two options:
- Location tracking — use classes for funds and locations for functional categories (Program / Admin / Fundraising). Then you can run expenses by location to build the functional report.
- Projects — best for time-boxed efforts with a start and end: a capital campaign, a mission trip, a VBS week, a specific grant. Projects give you an income-and-expense view of just that effort without cluttering your permanent class list. I lean on projects for anything that will end, and reserve classes for the funds that live forever.
One housekeeping note: QBO Plus caps the combined number of classes and locations, so be deliberate. Most churches need fewer funds than they think — five to eight real classes covers a lot of ground.
The report that keeps you honest: Balance Sheet by Class
Run Reports > Balance Sheet by Class (or Statement of Financial Position by Class) at least monthly. In a healthy file, each fund's column shows the cash and net assets that belong to it, and the restricted columns never go negative. A negative restricted fund means you spent restricted money you didn't have — that is the exact problem fund accounting exists to prevent.
Fair warning: this report is famously finicky in QBO. It frequently shows an unclassed column or fails to balance, and the usual culprits are predictable — Opening Balance Equity left over from setup, bank fees and interest that posted without a class, and one-sided transfers. When it won't balance, start by filtering for transactions with no class assigned. Nine times out of ten, that is your answer.
What QBO still won't do: donor receipts
QBO can record contributions, but it is not a giving platform, and its sales receipts do not produce a compliant year-end giving statement. The IRS requires a contemporaneous written acknowledgment for any single gift of $250 or more, including a statement that no goods or services were provided in exchange (see the IRS rules on written acknowledgments). Most churches handle giving and statements in a church management system — Planning Center Giving, Breeze, or Tithe.ly — and bring only the summarized deposit into QBO by fund. Let the ChMS own donor records and let QBO own the general ledger. Trying to make QBO do both creates duplicate, mismatched donor data.
If you want the broader picture of how giving records, payroll, and clergy housing allowances fit together, our complete guide to bookkeeping for churches walks through the full system. And if you are weighing whether to keep this in-house or hand it off, the signs in our piece on when to hire a bookkeeper apply to ministries too.
A quick setup checklist
- Subscribe to QBO Plus (check TechSoup pricing first).
- Set company type to Nonprofit (Form 990).
- Turn on class tracking and the unassigned-class warning.
- Turn on locations and/or projects for functional expenses and campaigns.
- Build the chart of accounts around two net asset classes, not departments.
- Create one class per fund; separate donor-restricted from board-designated.
- Class every transaction, including transfers.
- Reconcile, then run Balance Sheet by Class monthly.
Set up this way, QuickBooks Online gives a church a defensible, board-ready picture of where its money is and what it is allowed to do — without the price tag of dedicated fund-accounting software. The structure is simple; the consistency is the work. If your file has drifted and the fund columns no longer make sense, that is fixable, and it is the kind of cleanup the team at Turnkey CFO does regularly for ministries.
Frequently asked questions
Does QuickBooks Online do fund accounting?
Not natively. QBO has a single general ledger and no built-in fund module. You replicate fund accounting by using class tracking — one class per fund — and reporting income, expenses, and balances by class. It works for most churches but requires disciplined tagging.
Which QuickBooks Online plan do churches need?
QBO Plus at minimum, because class tracking (the basis of the fund workaround) isn't available in Simple Start or Essentials. Larger churches sometimes move to Advanced, but Plus covers most congregations.
Should I use classes or projects for our building campaign?
Use a project. Projects are designed for efforts with a beginning and end — capital campaigns, mission trips, grants — and give you a clean income-and-expense view. Reserve classes for permanent funds like general operating or benevolence.
Can QuickBooks Online send year-end giving statements?
Not in an IRS-compliant way. QBO sales receipts lack the required acknowledgment language for gifts of $250 or more. Track giving in a church management system and post summarized deposits by fund into QBO.