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July 30, 2024
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QuickBooks is a trusted name in accounting, but can it handle the unique demands of nonprofit grant management?
Let’s find out!
Keep reading as we evaluate QuickBooks’ key features, pricing plans, and how it stacks up against software designed specifically for grants management.
QuickBooks is accounting software designed to help small to medium-sized businesses track their finances.
The software helps business owners, accountants, and finance specialists organize a company’s income, expenses, inventory, and manage everyday bills. It also helps companies file their tax returns with the IRS with automated tax filing and payments.
While not specifically designed for managing grants, QuickBooks does have features that are relevant to nonprofits and can be used to help them keep track of funding.
In the following section, we will review three of QuickBooks’ key features that could be used for grant management:
Let’s see if these features meet the needs of nonprofit fundraising professionals.
QuickBooks integrates with popular fundraising platforms to automatically sync donations.
Through these integrations, nonprofits can streamline the exchange of their financial data and reduce the need to manually input each data entry over multiple applications. You can also sync your nonprofit’s bank account with QuickBooks, allowing you to manage expense tracking and cash flow all in one place.
While there are no features designed specifically for tracking grant funding, you can create “Classes” in QuickBooks to track each of your grants. The steps to do this are explained in this fund accounting article and are pictured below:
As you can see, you can track grant funding in QuickBooks; it’s just not a very intuitive or seamless process—especially when compared to tools designed specifically for grant funding management.
QuickBooks also doesn’t help you with other important aspects of grant management, such as monitoring the progress of your grant, adhering to important deadlines, or understanding specific compliance requirements from funders. QuickBooks is more of a financial tool for managing the numbers and tracking donations, not the overall lifecycle of grant awards.
QuickBooks Plus and Advanced plans offer detailed budget tracking that breaks down contributions and earned income.
Once you’ve manually organized your grants into “Classes”, you can create “sub-classes” underneath them. This creates a hierarchy in which your financial reports are now organized in charts or tables where you can see budgetary items for each fund.
NOTE: If using QuickBooks to track each grant separately, this process can be somewhat cumbersome because you need to enter all of the information manually into the system. Over time, your charts will become confusing and even unmanageable. Also, QuickBooks for nonprofits limits how many classes you have, meaning you cannot keep a history of your grant spending over time.
The basic versions of QuickBooks allow you to run general profit and loss reports, expenses, and balance sheets, while the more expensive options, like “Essentials,” allow you to run more enhanced reports with accounts receivables and payables.
Typically, nonprofits use QuickBooks to run profitability reports for grant projects. However, the reports themselves are more helpful when preparing for your annual IRS filings rather than developing specific reports for grant funders.
You can also attach grant agreements in your QuickBooks account to ensure you can find them quickly to help maintain any compliance requirements detailed in the agreement.
There are a few QuickBooks pricing plans to choose from depending on your specific needs. QuickBooks charges the following for their four plans:
All of the plans include app integration, free mobile apps, and QuickBooks support. However, the Simple Start and Essentials plans are still pretty basic, with general reporting options, invoice and payment features, and tax help. Nonprofits will more than likely need to use the Plus or Advanced plan for more comprehensive reports. The Advanced plan also syncs with Excel and offers 24/7 support and training.
Although the Plus and Advanced QuickBooks plans are targeted to nonprofits, they have a stronger focus on managing individual donations rather than grant funding. There are also discounts for nonprofits through TechSoup that could be helpful.
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QuickBooks is a popular choice for accounting software for small to medium-sized organizations, particularly in the for-profit sector.
Of the reviews we could find from nonprofit professionals, none of them referenced grant management. However, it seems many nonprofits have found success using Quickbooks for their general accounting needs.
As Jennifer Loi, Director of Finance for City Center Public Charter Schools, explains:
“When I joined City Center, the biggest problem I had was lack of targeted, good information that helps drive decisions. I need to bring in a tool that would allow me to do that. QuickBooks Enterprise fit the bill.”
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It should be clear by now that while QuickBooks can be used to manage grants, it’s not really designed for it. Thankfully, there are other solutions on the market that are designed specifically for finding and tracking your grant awards—including Instrumentl.
Let’s explore Instrumentl, and the features it offers to streamline the grant management process.
Instrumentl’s Grant Tracker automatically organizes all of your saved grants—including the ones you’ve been awarded!
With the Awards Dashboard, you’ll be able to see the most vital information for the grants you’ve won in one place, including the name, owner, deadline, status, amount, next task, and notes for each award.
Above your Tracker, you’ll also be provided with Award Statistics. These statistics will show you:
And if you want to share your Awards progress with your board or other stakeholders, you can create a report with just the click of a button!
The great thing about Instrumentl’s Grant Awards Tracker is that it eliminates the need for multiple spreadsheets or manual entry of data. Everything you need is easily accessible and organized in one place!
Instrumentl also provides tools for managing your individual grant payments and spenddown tracking.
Instrumentl’s Payment Tracking feature will allow you to visualize and monitor the inflow of funds for your awarded grants.
Whether you are paid in multiple installments, reimbursements, or lump sums, you can use Instrumentl’s Payment feature to manage when you expect grant funding, when you received it, and for how much.
Instrumentl also has a Spenddown Tracking feature that lets you track how you’re spending your grant funding in real time. With this tool, your team can upload expenses directly into Instrumentl so that you can monitor whether the actual expenditures are consistent with your planned budget. This will help you identify if you are going over budget immediately and keep your funders informed of any issues or changes.
As Matt Hugg, the founder of Nonprofit.Courses, explains,
“Not keeping up a line of communication with the funder about how the money is spent, and whether it is consistent with what you predicted in your proposal is a big mistake. Funders will be understanding of changes, IF you keep them informed about why they need to occur.”
Tracking grant payments is essential to maintaining financial transparency, ensuring you are compliant with your funder’s requirements and optimizing resource allocation. This spenddown tracking feature will also streamline the communication between your finance and program teams to enhance efficiency and reduce errors.
Instrumentl also allows you to set submission goals for each step of the grant process so you can track each and every grant opportunity.
How does this work exactly? Grant applications that have several steps are treated as one unit so that you never miss a deadline and, in turn, lose out on a funding opportunity.
For example, you can set dates in Instrumentl for when you need to submit a letter of inquiry, the full proposal, and any reports. That way, your entire team knows when these important documents are due.
Instrumentl will even automatically notify you if a funder changes a deadline or their priorities change.
Instrumentl also helps you track a funder’s history with your nonprofit so that you have all of the following easily accessible:
QuickBooks can be a helpful tool for the accounting side of your nonprofit, but doesn’t necessarily have features that streamline the tracking and management of your grant funds.
If you are looking for grant management-specific tools that will help you streamline your workflows, improve team collaboration, and ensure you apply for and manage grants effectively through the entire lifecycle, Instrumentl is a better option.
If you’re not currently an Instrumentl user, you can sign up for a 14-day trial.
Stephanie Paul Morrow
Stephanie Morrows holds a Ph.D. in Media and Communications and is a professor at PennState Harrisburg.
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