Understanding Non-Profit Accounting

A non-profit organization's objective is not to generate profit like a traditional commercial corporation. Non profits are usually funded through a combination of private and public donations (some of which may be from government sources. Non profit organizations can generate income through commercial activities, but the degree to which they are allowed to do this may be limited by federal or state regulations.

Non-profit accounting, or fund accounting, differs from commercial accounting because they have different purposes and goals. Non profit accounting software needs to offer the most effective means of recording and tracking sources of funding, and the distribution of the funds.