Unlike businesses, nonprofits do not sell products or services for profit; instead, they focus on activities meant to benefit the public, the organizations’ members, or a specific group. The laws governing tax-exempt organizations such as nonprofits creates the need for specific accounting software. Nonprofit accounting software focuses on funding in its various forms (grants, donations, gifts, or members' contributions). Nonprofit accounting helps organizations manage their finances transparently so donors can understand how their contributions are used. Special accounting reporting is also necessary to comply with regulations for grant submissions.

Nonprofit accounting software integrates with other solutions that nonprofits use to manage donations and gifts such as donor management software, nonprofit CRM software, or fundraising software.

To qualify for inclusion in the Nonprofit Accounting category, a product must:

• Comply with not-for-profit accounting standards
• Track payments for donations, gifts, or grants and allocate funds to various programs
• Manage other types of transactions such as returns, sales cancellation, or exchanges
• Help accountants show financial accountability to the board of directors
• Generate not-for-profit accounting documents such as end-of-year donations statements or donor contribution reports