How to Choose the Best Accounting Software for Charities

Most software packages weren’t designed with charities in mind! They handle basic transactions well enough but fall short when it comes to fund accounting, grant reporting or tracking restricted income.

These gaps matter. Trustees end up relying on spreadsheets to compensate for missing features, increasing the risk of errors and making audits more difficult.

But there are also charity-focused platforms, which can reduce risk and support day-to-day financial management.

This guide is designed to help trustees assess what matters most when selecting accounting software for charities in the UK, with a focus on clarity, compliance and future readiness.

What to Consider When Choosing Software for Non-profit Accounting

Whether you’re overseeing a small volunteer-led organisation or a larger non-profit with multiple income streams, the right software should support transparency, accuracy and board-level accountability.

The following considerations will help you assess which system is best suited to your charity’s needs.

Non-profit-Specific Features

As a trustee, you’ll want software that reflects the structure and requirements of charity finance. This means functionality that supports fund accounting, clear allocation of restricted and unrestricted income, and tools for managing grants and donations.

Many platforms don’t offer this as standard. Choosing charity accounting software designed with non-profits in mind reduces the risk of misclassification and streamlines compliance reporting.

If you’re working with multiple income sources or delivering grant-funded projects, this capability becomes essential. Prioritise systems that are already aligned with charity sector reporting, so you’re not compensating for missing functionality later.

Ease of Use

Your team may include finance staff, but it’s equally likely that day-to-day tasks fall to administrators or volunteers. That’s why ease of use matters.

Bookkeeping software for charities should be simple to navigate, with clear menus, logical workflows and helpful prompts. Good design improves data accuracy and reduces time spent on training.

If your system encourages confident use across the team, you’ll reduce errors and improve consistency in your financial records.

Reporting Capabilities

Trustees need financial information that is timely, accurate, and clear. That means more than a profit-and-loss summary. You’ll want software that provides reports by fund, project, or activity – with filters that align with your board’s oversight needs.

For UK charities, the ability to produce SORP-compliant outputs is especially valuable. Good accounting software for charities will allow you to generate customised reports at any point in the year, not just at year-end.

A strong reporting function also supports forecasting, budget comparisons, and cash flow planning, all of which are key to sound governance.

Integration

Most charities rely on a combination of systems to manage operations: donation platforms, payroll providers, CRM tools. Integration between systems reduces duplication and supports data accuracy.

When assessing charity accounting software, check whether it connects easily with the platforms you already use.

Direct bank feeds, automatic reconciliation, and donation syncing can save considerable time. Not-for-profit accounting software that integrates well supports smoother workflows and ensures financial data remains consistent across your organisation.

Budget

Value matters, especially when resources are limited. But value doesn’t always mean choosing the lowest-cost option. Before making a decision, make sure you assess the full cost of ownership: setup, training, support, additional user access and potential upgrade paths.

While there is free accounting software for UK-based charities, these tend to suit smaller organisations with simple requirements. As your operations grow, so will your reporting obligations.

Tip: Consider how the system will meet your needs over the next three to five years

Support and Training

Having access to responsive, knowledgeable support makes a real difference, especially during audits, staff changes or year-end preparation.

Look for providers that offer tailored guidance for the charity sector. Whether it’s via a helpdesk, online training materials or live sessions – good support ensures your team can use the software effectively from the start.

Accounting software for charities should come with onboarding tools and learning resources which align with charity terminology and processes.

Scalability

Charities grow, change, and adapt, and your accounting system should support that. Whether you’re adding new funds, launching a trading arm, or receiving a multi-year grant, your software should handle additional complexity without disruption.

Look for platforms that allow you to add users, expand your chart of accounts, or introduce new entities when required. Scalability ensures continuity and avoids the need for costly migrations later on.

Security

Trustees are responsible for safeguarding financial and personal data. That means selecting a system with appropriate security measures in place, even for small organisations.

Look for cloud accounting software that offers two-factor authentication, regular data backups, and GDPR-compliant data storage (ideally within the UK). Permissions should be flexible, so only the right people can access sensitive information.

Good security helps maintain trust with donors, staff, and regulators. Any provider should be transparent about their security protocols and ready to support you in meeting your obligations.

Best Accounting Software for UK Charities

Once you’ve identified the features that matter most, the next step is evaluating which platforms offer them in a way that aligns with your charity’s structure and reporting obligations.

Below are six widely used options in the UK charity sector, each offering tools designed to support trustees with fund management, regulatory compliance and day-to-day financial control.

Sage for Charities

Sage offers a version tailored specifically for UK charities, with automated fund tracking, SORP-compliant reporting and payroll integration. Trustees benefit from detailed reporting that supports internal oversight and external compliance. The system also allows for electronic payments and full bank reconciliation – helping reduce manual input.

For charities managing multiple funding streams or running payroll in-house, Sage provides a reliable structure to support trustee responsibilities.

Its familiarity with the sector and integration with HMRC tools make it a strong option for charities seeking both functionality and regulatory alignment.

Liberty Accounts

Liberty Accounts is a UK-based platform developed with charities and churches in mind. It supports fund accounting, Gift Aid claims, and pre-built SORP reporting templates. The software is competitively priced, particularly for smaller organisations and comes with a 6-month money-back guarantee.

Trustees looking for clarity on restricted funds or donor reporting will appreciate the system’s structure and customisation options.

For organisations that need to keep operational costs low while maintaining full financial oversight, Liberty strikes a practical balance between compliance, usability and cost efficiency.

QuickBooks Online

QuickBooks Online offers non-profit functionality within a familiar interface. Trustees can use a pre-configured chart of accounts suited to UK charities, with support for donor records, categorised income and basic grant-tracking.

It integrates well with CRM tools and banking platforms, making reconciliation straightforward. For smaller charities, the Essentials plan covers core requirements and the platform is known for its user-friendly design.

Zoho Books

Zoho Books is a cost-effective option with features that cover donation tracking, automated donor receipts, and multi-currency support. UK charities benefit from a 15% discount, which makes it one of the most affordable tools for small organisations.

The interface is clean and accessible, and the reporting functions cover fund performance, income sources and expenses.

Trustees managing small budgets or volunteer-led teams may find Zoho particularly useful, especially where straightforward financial tracking and easy setup are priorities.

It also integrates with other Zoho tools, which may support operational consistency if already in use.

Xero

Xero is a well-established cloud platform often used by small and medium-sized UK charities. It supports fund accounting, payroll integration and VAT handling, including more complex charity VAT scenarios.

The system is particularly strong in automation, including bank feeds, invoice reminders and reconciliations, which reduces administrative load.

Trustees can generate real-time financial reports and share access securely with accountants and auditors.

Xero’s flexibility, combined with its modern interface, makes it a good fit for charities seeking scalable cloud-based accounting with strong governance support.

Dynamics 365 Business Central

Last but not least, Dynamics 365 Business Central is a high-capacity system best suited to larger charities or those with complex funding structures. It supports advanced fund management, workflow automation and multi-entity reporting.

For trustees overseeing large operations or multiple branches, it provides a full view of financial and operational data in one place.

While the investment is higher than other systems, the flexibility and control it offers may justify the cost for organisations with demanding compliance and reporting needs.

Business Central also allows for tailored permissions and integrates well with wider Microsoft 365 tools.