How Accounting Software for Faith Organizations Is Different

Reading Time: 2 minutes

Because accounting is different for churches, your religious organization’s accounting software handles different tasks than that of a program aimed at businesses. MIP offers software designed to perform fund accounting for religious organizations.

This guide will highlight the differences between for-profit and nonprofit accounting solutions.

Church Human Resources and Payroll Systems

One difference between accounting for businesses versus nonprofits is that for-profit entities must pay income tax. Conversely, instead of creating a quarterly income statement, churches, mosques, synagogues and temples must provide a summary of their activities. These nonprofit entities must also provide a balance statement that includes their equity and a statement on their financial position.

Fund accounting software for faith-based institutions makes maintaining compliance easier. A church, for example, can lose its tax-exempt status under various circumstances, such as excessive political involvement and the sale of merchandise unrelated to its mission. Proper documentation helps your institution keep its tax-exempt status.

Like a business, though, religious institutions have human resources and payroll responsibilities. Those obligations are more complex for a nonprofit’s human resource staff. For example, a church doesn’t have to withhold federal income tax for its ministers, but it may have to make certain payments, like those for housing or a parsonage, which are not taxable.

Fund Accounting for Churches & Religious Organizations

A fund is any area or effort within your organization that needs separate resources. Those resources can come from grants, contributions and other origins. If you receive donations for a specific fund, your organization has a legal obligation to use that money for the designated purpose. You must track the money you receive, spend and have left over for each fund separately from the others and from general-purpose resources. Some examples of funds your religious organization might have are:

  • Campaigns: If members of your organization seek to construct a building or complete other projects, they might have a campaign. These funds can involve donor dollars or money from fundraising.
  • Departments: Some parts of your organization, like youth groups or participants in mission trips, may need separate funds.

Nonprofit fund accounting software for churches and other religious organizations manages those funds through a true chart of accounts. With the right software, you can make distinctions between money that belongs to specific funds and resources meant for general use within your organization. You’ll also receive reports that prove the funds are going to their designated purpose.

MIP’s Accounting Software for Faith-Based Institutions

Unlike other accounting software intended for corporate use, MIP Fund Accounting® creates purpose-built solutions for nonprofit accounting. We design our software with religious institutions and other nonprofit organizations in mind. Our software holds top ratings for compliance and security. It also has the range to perform all your critical accounting tasks. MIP accounting software for faith-based institutions is comprehensive, scalable and configurable. Our solutions are complete with features like:

  • Unlimited budgeting and forecasting.
  • Bank reconciliation.
  • Accounts payable and receivable capabilities.

Get started by requesting a demonstration today, and be sure to ask about our implementation and training services. For more information, you can contact MIP Fund Accounting online or by phone at 800-811-0961.

Share this post


Stay on top of the latest and greatest. Sign up now.

Email Signup