Nonprofit Bookkeeping Project with Journal Entries

📖 Blog: Nonprofit Organization Bookkeeping Project – A One-Month Cycle

Non Profit organization  Bookkeeping Project

Introduction

Bookkeeping is the backbone of financial management for every organization, including nonprofits. Unlike businesses, nonprofits do not primarily aim to earn profits but to serve a mission—whether it’s education, healthcare, community welfare, or environmental protection. However, even with a noble mission, nonprofits need accurate bookkeeping to track donations, grants, expenses, and compliance requirements.
In this blog, we’ll walk through a one-month bookkeeping cycle of a nonprofit organization with examples, journal entries, trial balance, income statement, and balance sheet. By the end, you’ll understand how bookkeeping ensures transparency and accountability for nonprofit organizations.

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📌 The Importance of Bookkeeping in Nonprofits

• Transparency for donors and grant providers
• Regulatory compliance with tax laws and reporting standards
• Budgeting and planning for mission-driven activities
• Tracking restricted vs. unrestricted funds
• Ensuring accountability for every dollar spent

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🗓️ The Nonprofit Case Study: One Month Cycle

Let’s assume a nonprofit called Helping Hands Foundation (HHF) that focuses on community welfare. Here’s a breakdown of transactions for January 2025.

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✅ Transactions for January

1. Opening balance: $20,000 in bank.
2. Donation received (cash): $10,000.
3. Donation received (restricted grant): $15,000 for education program.
4. Office supplies purchased (cash): $500.
5. Program expenses – food for community drive (bank): $3,000.
6. Salaries paid to staff (bank): $5,000.
7. Volunteer expense reimbursement (cash): $400.
8. Fundraising event income (cash): $2,500.
9. Fundraising event expenses (cash): $1,000.
10. Utility bill paid (bank): $300.
11. Grant used for education program (books purchased via bank): $7,000.
12. Depreciation of office equipment: $200.

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📝 Journal Entries for January

Date	Account	Debit ($)	Credit ($)
Jan 1	Bank A/c	20,000
	Opening Balance Equity A/c		20,000
Jan 2	Cash A/c	10,000
	Donation Revenue A/c		10,000
Jan 3	Bank A/c	15,000
	Restricted Grant Revenue A/c		15,000
Jan 4	Office Supplies Expense A/c	500
	Cash A/c		500
Jan 5	Program Expense A/c	3,000
	Bank A/c		3,000
Jan 6	Salaries Expense A/c	5,000
	Bank A/c		5,000
Jan 7	Volunteer Expense A/c	400
	Cash A/c		400
Jan 8	Cash A/c	2,500
	Fundraising Revenue A/c		2,500
Jan 9	Fundraising Expense A/c	1,000
	Cash A/c		1,000
Jan 10	Utility Expense A/c	300
	Bank A/c		300
Jan 11	Education Program Expense A/c	7,000
	Bank A/c		7,000
Jan 12	Depreciation Expense A/c	200
	Accumulated Depreciation A/c		200

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📊 Trial Balance – January 31, 2025

Account	Debit ($)	Credit ($)
Bank A/c	19,700
Cash A/c	10,600
Office Supplies Expense A/c	500
Program Expense A/c	3,000
Salaries Expense A/c	5,000
Volunteer Expense A/c	400
Fundraising Expense A/c	1,000
Utility Expense A/c	300
Education Program Expense A/c	7,000
Depreciation Expense A/c	200
Accumulated Depreciation A/c		200
Donation Revenue A/c		10,000
Restricted Grant Revenue A/c		15,000
Fundraising Revenue A/c		2,500
Opening Balance Equity A/c		20,000

Totals → Debit: $47,700 | Credit: $47,700

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📑 Statement of Activities (Income Statement) – January 2025

Revenues:

• Donation Revenue: $10,000
• Restricted Grant Revenue: $15,000
• Fundraising Revenue: $2,500

Total Revenues = $27,500

Expenses:

• Office Supplies: $500
• Program Expenses: $3,000
• Salaries: $5,000
• Volunteer Expenses: $400
• Fundraising Expenses: $1,000
• Utility Expenses: $300
• Education Program Expenses: $7,000
• Depreciation: $200
Total Expenses = $17,400

Change in Net Assets = $27,500 – $17,400 = $10,100

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📑 Balance Sheet – January 31, 2025

Assets

• Bank A/c: $19,700
• Cash A/c: $10,600
• Accumulated Depreciation (-200)
Total Assets = $30,100

Liabilities

None for this month

Net Assets (Equity)

• Opening Balance: $20,000
• Current Surplus: $10,100
Total Net Assets = $30,100

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💡 Key Learnings from the Cycle

1. Transparency: Every donation is recorded and traceable.
2. Restricted vs. unrestricted funds: Restricted grants must only be used for their intended purpose.
3. Accountability: Reports clearly show how much is spent on programs vs. admin costs.
4. Compliance: Bookkeeping ensures nonprofits are audit-ready.

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📌 Conclusion

Nonprofit bookkeeping is not just about compliance—it builds trust. Donors and grant providers want proof that funds are used responsibly, and a solid bookkeeping cycle makes this possible. Whether you’re tracking donations, grants, expenses, or preparing reports, bookkeeping empowers nonprofits to focus on their mission while staying financially healthy.

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