What is fund accounting for churches?

Fund accounting is an accounting method that separates church finances into distinct "buckets" based on purpose and donor restrictions. For churches, common funds include: General Fund (unrestricted tithes and offerings for operations), Missions Fund (designated giving for missionary support and outreach), Building Fund (capital campaigns for construction or renovation), Benevolence Fund (assistance for members or community in need), and Youth/Children Ministry Funds. When a member gives $500 to missions, fund accounting ensures that money stays in the missions bucket and cannot be spent on utilities or salaries. This honors donor intent and maintains congregational trust. Churches typically report fund balances to the congregation monthly or quarterly.

Can churches use QuickBooks for accounting?

Yes, churches can use QuickBooks Online or QuickBooks Desktop, but it requires workarounds since QuickBooks is designed for for-profit businesses. To simulate fund accounting, use QuickBooks "Classes" to represent each fund (General, Missions, Building, etc.). This allows tracking income and expenses by fund. However, QuickBooks limitations for churches include: no native fund balance tracking (requires manual Excel reconciliation), no contribution statement generation (need third-party add-on or manual statements), Form 990 requires manual account mapping, and no integrated member/donor database. QuickBooks works for small churches with simple finances (single fund, few designated gifts). Churches with multiple restricted funds, building campaigns, or detailed member giving records should consider purpose-built church accounting software like Aplos or PowerChurch.

How do churches track member contributions?

Churches track member contributions using accounting software with integrated giving modules. Best practices include: assigning each member/family a unique giving number (maintains confidentiality while enabling tracking), recording contributions weekly after counting (note date, amount, fund designation, payment method), issuing year-end contribution statements (required for members to claim tax deductions), and keeping backup records (deposit slips, offering envelopes, online giving receipts). Software like Aplos, ChurchTrac, and PowerChurch automatically track contributions, generate IRS-compliant statements, and link giving to member profiles. For donations over $250, the IRS requires churches to provide written acknowledgment including: church name, donation amount, date, and statement that no goods or services were provided in exchange.

What is the difference between Aplos and PowerChurch?

Aplos and PowerChurch are both church accounting solutions but differ significantly in deployment and features. Aplos is cloud-based ($79/month), includes donor management and online giving, offers true fund accounting with automatic tracking, provides Form 990-ready reports, and is ideal for churches wanting modern web-based access. PowerChurch Plus is desktop software (one-time $395 purchase) with optional cloud hosting, includes comprehensive membership management, requires no internet for basic operation, and is ideal for churches preferring desktop software with no recurring fees. Key differences: Aplos has a lower entry cost but ongoing monthly fees, while PowerChurch has a higher upfront cost but no subscription. Both handle fund accounting well. Choose Aplos for cloud access and integrated online giving; choose PowerChurch for desktop preference and one-time purchase.

Do churches need to file Form 990?

Most churches are automatically exempt from filing Form 990 under IRC Section 6033(a)(3)(A)(i). However, some church-related organizations must file: church-operated schools, hospitals, or missions (separate legal entities), church retirement plans and benefit programs, and religious organizations not meeting the IRS definition of "church" (14-point test). Even exempt churches may choose to file Form 990 voluntarily for transparency. Churches that do file typically use Form 990 or Form 990-EZ (for organizations with gross receipts under $200,000 and assets under $500,000). Church accounting software like Aplos can generate Form 990 reports even if not required—useful for grant applications or denominational reporting.

How much does church accounting software cost?

Church accounting software pricing ranges from free to several hundred dollars monthly. Budget options: ChurchTrac Basic ($8-35/month) offers simple accounting and member management. IconCMO ($35-75/month) provides fund accounting with online giving. Wave Accounting (free) works for very small churches but lacks fund accounting. Mid-tier options: Aplos ($79/month) delivers true fund accounting, donor management, and online giving. Realm ($45-100/month) combines accounting with comprehensive church management. PowerChurch Plus ($395 one-time) is desktop software with no monthly fees. Enterprise options: ACS Technologies (custom pricing) serves large churches with complex needs. Shelby Financials ($200+/month) handles multi-campus and large staff. Most churches under 200 members find adequate solutions in the $30-80/month range.

What features should church accounting software have?

Essential church accounting software features include: Fund Accounting (track general, missions, building, benevolence, and designated funds separately with automatic fund balances), Contribution Tracking (record member giving, generate IRS-compliant year-end statements, track pledges and recurring gifts), Bank Reconciliation (match transactions to bank statements, categorize by fund), Online Giving Integration (accept credit/debit cards and ACH, automatic posting to accounting), Financial Reporting (Income Statement by Fund, Balance Sheet, Budget vs Actual by ministry), and Member/Donor Database (link contributions to member profiles, track contact information). Nice-to-have features: budget management with variance alerts, accounts payable for vendor payments, payroll integration for staff, and mobile access for treasurers. Ensure the software can export data for annual audits and denominational reporting.

Best Church Accounting Software 2025

Track tithes, manage designated funds, and honor donor intent with fund accounting software built for churches. Compare Aplos, PowerChurch, ChurchTrac, and QuickBooks for religious organizations.

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What Makes Church Accounting Different?

Churches face financial complexities most organizations never encounter. Between tracking tithes, special offerings, mission funds, and maintaining tax-exempt status, their accounting needs go far beyond basic bookkeeping.

Unlike for-profit businesses that track profit and loss, churches use fund accounting—a system that separates resources into distinct "buckets" based on donor intent and purpose. When a member gives $500 designated for missions, that money must stay in the missions fund and cannot be used for utilities or staff salaries.

Church income is also unpredictable. Giving depends on congregational attendance, economic conditions, and seasonal patterns (December and Easter typically see higher giving). Software must help churches budget conservatively and track giving trends over time.

Why churches need specialized software:

Fund accounting to track restricted donations separately from general operating funds
Contribution tracking for year-end statements and IRS compliance
Member/donor database linking giving history to families and individuals
Fund balance reporting showing congregations exactly how designated money is being used
Tax-exempt compliance including payroll handling for ministers with housing allowances

Church Accounting Software Comparison

Compare fund accounting platforms by church size, deployment preference, and pricing model.

BUILT FOR CHURCHES

Aplos

Best for: Churches wanting cloud-based fund accounting

Pricing:$79/month

Fund Accounting:True fund accounting

Deployment:Cloud-based

Key Features:

Built specifically for churches and nonprofits
True fund accounting with automatic tracking
Integrated online giving and donor management
Contribution statements with IRS compliance
Form 990 reporting (if needed)
Mobile app for on-the-go access

Limitations:

•Monthly subscription adds up over time
•Requires internet connection
•Less robust for very large multi-campus churches

PowerChurch Plus

Best for: Churches preferring desktop software

Pricing:$395 one-time

Fund Accounting:Full fund accounting

Deployment:Desktop (cloud optional)

Key Features:

One-time purchase with no monthly fees
Comprehensive fund accounting system
Detailed membership and family tracking
Contribution statements and giving analysis
Works offline without internet
Established since 1984 with proven reliability

Limitations:

•Desktop interface feels dated compared to cloud options
•Annual support/updates are additional cost
•Single computer install (network version extra)

ChurchTrac

Best for: Small churches on a budget

Pricing:$8-35/month

Fund Accounting:Basic fund tracking

Deployment:Cloud-based

Key Features:

Very affordable pricing for small congregations
Fund accounting capability included
Bank synchronization for automatic imports
Member management with giving tracking
Custom import rules for categorization
Check-in system for attendance

Limitations:

•Less sophisticated fund reporting than Aplos
•Limited advanced accounting features
•Better for churches under 200 members

QuickBooks Online

Best for: Churches with CPA doing books

Pricing:$35-90/month

Fund Accounting:Simulated via Classes

Deployment:Cloud-based

Key Features:

Familiar to most accountants and CPAs
Strong bank reconciliation features
Wide ecosystem of add-ons and integrations
Professional-grade financial reporting
Mobile app and multi-user access
Available at discount via TechSoup

Limitations:

•Not built for fund accounting (requires Class workarounds)
•No contribution statement generation built-in
•No member/donor database
•Cannot track true Fund Balances without manual Excel work

Zera Books

Best for: Accountants serving multiple churches

Pricing:$79/month unlimited

Fund Accounting:Not applicable (document processing)

Deployment:Cloud-based

Key Features:

AI-powered bank statement processing
Convert bank PDFs to Excel/QuickBooks in seconds
Auto-categorize transactions by expense type
Unlimited processing for all church clients
Direct QuickBooks and Xero integration
Multi-client dashboard for bookkeepers

Limitations:

•Not a complete church management system
•Focused on document processing automation
•Best as complement to church accounting software

Common Church Fund Types

Understanding the funds your church needs to track for proper stewardship and donor accountability.

General Operating Fund

Unrestricted tithes and offerings that support day-to-day church operations: staff salaries, utilities, supplies, insurance, and routine maintenance. This is typically the largest fund and covers expenses not designated for specific ministries.

Missions Fund

Designated giving for missionary support, outreach programs, and international ministries. Donors expect these funds to support evangelism and missions work specifically—not general operations. Track support for individual missionaries separately if needed.

Building Fund

Capital campaign contributions for construction, major renovations, or debt reduction on facilities. Building funds are often restricted by donor designation and should only be spent on facility-related projects. Report fund balance growth to encourage continued giving.

Benevolence Fund

Discretionary funds for helping church members or community members in financial need. Typically managed by pastoral staff with confidential disbursements. Maintain records for audit purposes while protecting recipient privacy.

Youth & Children Ministry

Designated giving for youth group activities, VBS, camps, and children's programming. Parents often give specifically to support programs their children participate in. Track separately to demonstrate stewardship to ministry supporters.

Special Projects Fund

Temporary restricted funds for specific initiatives: mission trips, equipment purchases, memorial gifts, or one-time events. Create sub-funds for each project to track against fundraising goals and ensure donor intent is honored.

Church Accounting Best Practices

Follow these practices to maintain congregational trust, honor donor intent, and prepare for annual audits.

Separate Church Funds from the Start

Set up distinct fund accounts for General, Missions, Building, Benevolence, and any ministry-specific designations before recording transactions. This prevents the common problem of co-mingled funds that are impossible to untangle later. Most church accounting software makes this easy with pre-built fund structures.

Count Offerings with Two People

Always have at least two unrelated individuals count offerings together. Record the count on a deposit slip with both signatures. This protects both the church from theft and the counters from false accusations. Many denominations require this as policy.

Record Contributions Weekly

Enter contribution records within 2-3 days of receiving them while offering envelopes and online giving records are fresh. Match bank deposits to recorded contributions. Delays create errors and make year-end statement generation problematic.

Reconcile Bank Accounts Monthly

Reconcile all church bank accounts by the 15th of the following month. Compare fund balances to actual bank balances for restricted accounts held separately. Investigate discrepancies immediately—small errors become big problems when discovered at audit.

Generate Monthly Treasurer Reports

Provide the church board with monthly financial statements: Income vs Budget by Fund, Fund Balance Summary, and Cash Flow. Transparency builds congregational trust and helps leadership make informed decisions about ministry spending.

Issue Year-End Contribution Statements

Mail or email contribution statements by January 31 for the prior year. Include donor name, total giving by fund, statement that no goods or services were provided, and church EIN. IRS requires written acknowledgment for deductions of $250 or more.

Church Financial Compliance

Key compliance areas for maintaining tax-exempt status and proper financial stewardship.

Form 990 Exemption

Churches are generally exempt from filing

IRC Section 6033(a)(3)(A)(i) exempts churches from Form 990. However, church-run schools, hospitals, and separate nonprofits may need to file.

Tax-Exempt Status

Maintain 501(c)(3) compliance

Churches are automatically considered tax-exempt but should maintain records proving religious purpose. Avoid political campaign activities and excessive lobbying.

Contribution Acknowledgments

IRS requirements for donor receipts

Donations $250+ require written acknowledgment with church name, amount, date, and no-goods-or-services statement. Issue by January 31 for prior year.

Payroll Compliance

Minister and staff tax obligations

Ministers are dual-status for tax purposes (employee for income tax, self-employed for FICA). Churches must handle housing allowances and retirement correctly.

Frequently Asked Questions

Common questions about church accounting software answered.

Church accounting software is specialized financial management software designed for religious organizations that need to track tithes and offerings, manage designated funds (missions, building, benevolence), and maintain tax-exempt compliance. Unlike business accounting software, church systems use fund accounting—separating restricted donations from general operating funds to honor donor intent. Key features include: fund accounting (track multiple ministry funds separately), contribution tracking (record member giving for year-end statements), designated giving management (ensure donations go to intended purposes), and Form 990 reporting (most churches file Form 990 or 990-EZ). Popular options include Aplos ($79/month), PowerChurch Plus (one-time $395), and ChurchTrac ($8-35/month).

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