Charity Accounts and SORP
Charity accounting software compared: which package fits your organisation?
Most general accounting software was not designed for fund accounting, SORP-compliant reporting or the Charity Commission filing format. This guide compares the realistic options for UK charities and CICs, from dedicated nonprofit platforms to adapted general-purpose tools, and explains what each one does and does not handle natively.
Most accounting software was built for businesses: a single pool of income, straightforward profit and loss, VAT returns. Charities operate differently. They track restricted and unrestricted funds separately, prepare a Statement of Financial Activities rather than a profit and loss, need to record Gift Aid claims, and must file accounts in a format that satisfies the Charity Commission under SORP (Statement of Recommended Practice).
The result is that a tool which works well for a sole trader or small company may require significant workarounds in a charity context. This guide sets out the realistic options, what each handles natively and what it does not.
What charity accounting software needs to do
Before comparing products, it helps to identify the functions that are specific to charities rather than shared with commercial accounting:
- Fund accounting. Tracking restricted, unrestricted and endowment funds as separate pots within the same organisation. Income received under a restricted grant must stay in that fund; any unspent balance at year end must remain in the restricted fund, not released to general reserves without trustee authority and SORP compliance.
- Statement of Financial Activities (SOFA). The SORP-mandated income and expenditure statement, structured by income type (donations, grants, trading, investment) and expenditure type (charitable activities, raising funds, governance costs). Differs materially from a standard profit and loss.
- Designated and endowment fund separation. Larger charities hold designated reserves (board-earmarked but legally unrestricted) and permanent endowments separately in the balance sheet. Software needs to surface these as distinct fund lines.
- Gift Aid tracking. Recording which donations are eligible for Gift Aid, what has been claimed, and what remains outstanding. The actual claim goes to HMRC via Charities Online, but the underlying record lives in the accounting system.
- Departmental or project cost allocation. Apportioning overhead costs across charitable activities and support functions in line with SORP guidance. This is particularly important for charities with multiple programmes.
- Multi-user access with role separation. Trustees, finance officers and external independent examiners or auditors typically need different access levels.
- Payroll integration. Most charities with staff run payroll through a separate PAYE scheme; the software should connect cleanly without double-entry.
- Accounts production in SORP format. The output that goes to the Charity Commission annual return. Some software templates this; others require manual reformatting outside the system.
The main options for UK charities
Dedicated charity accounting platforms
Access Financials (Access Charity Accounting)
Type: Dedicated nonprofit and charity accounting platform.
Fund accounting: Native. Restricted, unrestricted and endowment funds are core architecture, not a workaround.
SORP output: Built-in SOFA and balance sheet templates mapped to SORP headings.
Gift Aid: Module included; generates the schedule for upload to Charities Online.
Best for: Charities with multiple restricted funds, multiple projects and a requirement to produce SORP-formatted accounts without external reformatting.
Limitations: Higher cost than general SME tools; more configuration required at setup. Aimed at mid-size to larger charities rather than very small organisations.
Charitylog
Type: Charity-specific management and accounting platform, popular with social care, advice and community organisations.
Fund accounting: Supported.
SORP output: Included reporting aligned to Charity Commission requirements.
Best for: Charities that also need client/beneficiary management alongside financial records. The two systems share a single database, avoiding double-entry between finance and service delivery records.
Limitations: The breadth of features can be more than a finance-only user needs. Smaller charities without a client management function may find a lighter tool sufficient.
Sage Intacct Nonprofits
Type: Cloud financial management, nonprofit edition.
Fund accounting: Native multi-dimensional tracking (fund, project, department, location).
SORP output: Configurable reporting dimensions allow SOFA-structured output; typically requires initial setup by an implementation partner.
Best for: Mid-size to larger charities, housing associations and social enterprises with complex multi-site or multi-programme operations.
Limitations: Implementation cost and ongoing subscription are higher than SME tools. Not appropriate for small charities with simple income streams.
General SME accounting tools used by charities
Xero
Type: General cloud accounting. Widely used across commercial SMEs and increasingly by smaller charities and CICs.
Fund accounting: Not native. Restricted funds can be approximated using Xero's Tracking Categories (two dimensions: typically Fund and Project/Programme), but this is a workaround rather than true fund accounting. Reporting across tracking categories requires manual construction or third-party reporting tools.
SORP output: Not built in. A customised chart of accounts mapped to SORP headings can produce reports that approximate the SOFA, but accounts production in final format normally requires an accountant to compile the statutory presentation outside Xero.
Gift Aid: No native Gift Aid module. Donation records need manual extraction for the Charities Online submission.
Best for: CICs (no SORP obligation), small charities with a single unrestricted income stream, and charities whose accountant is already on Xero and handles the SORP reformatting externally.
Limitations: As soon as restricted funds appear, the workaround becomes administratively burdensome. Organisations with three or more restricted grants frequently find the tracking category approach breaks down in practice.
QuickBooks
Type: General cloud accounting. QuickBooks operates a registered charity discount scheme for eligible organisations.
Fund accounting: Not native. Class and location tracking can separate income streams, but does not enforce fund accounting discipline in the way a dedicated charity platform does.
SORP output: Not built in. Similar to Xero: a bespoke chart of accounts can approximate SORP headings, but final accounts production normally happens outside the software.
Gift Aid: No dedicated module.
Best for: Small charities and CICs already using QuickBooks for simplicity, or organisations that qualify for the charity discount and have a straightforward single-fund income structure.
Sage Accounting (formerly Sage One)
Type: General cloud accounting aimed at small businesses.
Fund accounting: Not native at the small business tier. The enterprise Sage Intacct Nonprofits product (listed separately above) handles fund accounting properly.
SORP output: Not built in at the small business tier.
Best for: Very small charities with simple income and expenditure where the primary need is bookkeeping and payroll rather than SORP compliance. Charities needing proper SORP accounts should escalate to Sage Intacct or a dedicated platform.
FreeAgent
Type: General cloud accounting, popular with sole traders and micro-businesses. Available free to NatWest Group business banking customers.
Fund accounting: Not supported.
SORP output: Not supported.
Gift Aid: Not supported.
Best for: Unincorporated associations and CICs with very simple finances where the primary need is tracking income and expenditure and preparing a bank reconciliation. Not suitable for charities with restricted funds or a Charity Commission filing obligation above the receipts and payments threshold.
Comparison table
| Software | Native fund accounting | SORP-formatted output | Gift Aid module | Best fit |
|---|---|---|---|---|
| Access Financials | Yes | Yes | Yes | Mid-size to larger charities with multiple restricted funds |
| Charitylog | Yes | Yes | Via reporting | Charities needing client management alongside finance |
| Sage Intacct Nonprofits | Yes (multi-dimensional) | Configurable | Via reporting | Larger, multi-site charities and housing associations |
| Xero | Workaround only | No (external reformatting needed) | No | CICs, simple single-fund charities, accountant-led engagements |
| QuickBooks | Workaround only | No (external reformatting needed) | No | Small charities, charity discount eligible organisations |
| Sage Accounting | No | No | No | Very simple income/expenditure tracking only |
| FreeAgent | No | No | No | CICs and micro-organisations with no restricted funds |
The receipts and payments versus accruals question
Charities in England and Wales with gross income below £250,000 (£500,000 for financial years ending on or after 30 September 2026) may prepare receipts and payments accounts rather than accruals accounts. Receipts and payments is simpler: it records cash received and cash paid in the year, without adjusting for debtors, creditors or prepayments. Some dedicated charity tools produce both formats; most general tools produce accruals-basis figures by default and require manual conversion for a receipts and payments presentation.
Charities above £250,000 gross income (£500,000 for financial years ending on or after 30 September 2026) must prepare accruals accounts under SORP. If your organisation is approaching that threshold, it is worth checking that your current software can produce accruals-basis SOFA reports before you reach it, rather than changing systems under time pressure at year end.
Independent examination and audit access
Whether your accounts are independently examined or audited, the examiner or auditor needs read access to the accounting records. Most cloud platforms (Xero, QuickBooks, Access Financials) allow an accountant or examiner seat at no extra cost. Confirm this before committing to a platform, and check that the access level is sufficient for the examiner to verify individual transactions, not just summary reports.
For charities with gross income above £1 million, or above £250,000 with gross assets above £3.26 million (above £1.5 million, or £500,000 with gross assets above £5 million, for financial years ending on or after 30 September 2026), a full statutory audit is required rather than an independent examination. Auditors typically have standard workflow integrations with Xero, QuickBooks and Sage; some dedicated charity platforms are less familiar to audit firms and may require manual data export.
What to check before committing to a platform
- How does it handle a second restricted grant? Ask the vendor to demonstrate the fund separation when two restricted grants are active simultaneously and one closes mid-year.
- Can it produce the SOFA directly? Ask to see a sample output. If the answer is "your accountant reformats it," factor in that ongoing cost.
- How does Gift Aid flow from donation record to Charities Online schedule? The software should be able to export the Gift Aid schedule or generate the R68(i) data in the format HMRC expects.
- What is the accountant access model? Confirm the examiner or auditor can view source transactions, not just summary reports, and that adding them does not incur additional user licence costs.
- Does the vendor have other charity clients of a similar size? Reference clients in your income band and sector are more useful than generic testimonials.
- What does migration look like? If you are moving from a spreadsheet or legacy system, understand how opening fund balances are imported and reconciled before the first year-end on the new platform.
When software is not the answer
For charities with very simple finances, especially those below £25,000 gross income with a single income stream, the overhead of setting up and maintaining accounting software may exceed its value. A well-maintained spreadsheet, reviewed by an accountant at year end, can be sufficient for the receipts and payments format. The Charity Commission's annual return for sub-£25,000 charities does not require attached accounts at all.
Equally, for charity trustees who are volunteers without a finance background, the learning curve on any accounting platform can be steep. Some organisations find it more cost-effective to outsource the bookkeeping function entirely than to train volunteers on software that sees irregular use between year ends.
If you are unsure whether your organisation needs software, a specialist, or both, the contact form below connects you with a charity accounts specialist who can advise based on your income level, fund structure, and whether an independent examination or audit applies.
Frequently asked questions
- Does any off-the-shelf software produce a Charity Commission-ready set of accounts?
- Not automatically. Producing a compliant SORP set of accounts (Statement of Financial Activities, balance sheet, notes) requires either a dedicated charity accounting tool that templates these outputs, or a general accounting package combined with manual consolidation into the Charity Commission's preferred format. Some charity-specific platforms include account templates that map directly to SORP headings; general tools like Xero and QuickBooks require a chart of accounts customisation and a separate accounts-production step, typically handled by your accountant.
- What is fund accounting and why does it matter for charities?
- Fund accounting is the practice of tracking restricted and unrestricted income and expenditure separately within the same organisation. A grant restricted to a specific project must be accounted for within that fund, and you cannot spend it on general running costs and cannot report it alongside unrestricted reserves without separating the two. SORP requires this separation in the Statement of Financial Activities. Most general SME accounting tools do not have native fund accounting; they treat all income as a single pool. Dedicated charity tools and some Xero/QuickBooks configurations with tracking categories can approximate it, but native fund accounting support is cleaner.
- Do charities need to file their accounts in any particular software format?
- The Charity Commission (England and Wales), OSCR (Scotland) and CCNI (Northern Ireland) accept uploaded PDF accounts. There is no mandatory software-format submission. The requirement is that the accounts comply with SORP, not that they are produced by a specific system. Small charities below £25,000 gross income submit an annual return without accounts; those above £25,000 attach accounts to their annual return online.
- Can a CIC use the same accounting software as a charity?
- Yes. Community Interest Companies are Companies House entities and file accounts under Companies Act rules rather than charity SORP. They have no fund accounting or SORP obligation. A CIC can use any standard accounting software (Xero, QuickBooks, FreeAgent, Sage). If a CIC prepares social impact accounts voluntarily, some charity-specific tools can help with that framing, but it is not a regulatory requirement.
- Should we let the software or our accountant handle Gift Aid?
- Gift Aid claims are submitted directly to HMRC through a separate Charities Online portal, and accounting software does not file Gift Aid on your behalf. Software's role is to record which donations qualify and track what has been claimed versus what is outstanding. Some dedicated charity tools include a Gift Aid module that flags eligible donations and generates the donations schedule (the HMRC spreadsheet) for upload to Charities Online. General accounting tools require manual extraction of the qualifying donations for that schedule.
- What size charity needs dedicated charity software versus a general package?
- As a rough guide: charities with a single income stream, no restricted funds and gross income below £100,000 can usually manage with a general tool like FreeAgent or adapted Xero. Charities with multiple restricted grants, payroll, Gift Aid and a requirement to produce SORP-formatted accounts benefit from a dedicated platform. The cost of the accountant's time to reformat general-package outputs into SORP often exceeds the extra cost of a dedicated tool above a certain organisation size.
- Is there free charity accounting software?
- Some vendors offer discounted or free tiers for registered charities. QuickBooks operates a charitable discount scheme; Xero offers a discounted nonprofit rate in some regions; some dedicated charity platforms offer free tiers for very small organisations. Eligibility and discount levels change, so verify directly with each vendor. This page does not quote current pricing because it changes frequently, so the vendor's website is always the definitive source.
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