Non-profit bookkeeping starts from a different question than a regular small business: not just "how much did we make," but "where did this money come from, and are we allowed to spend it on what we're spending it on."

Non-Profit and Registered Charity Are Not the Same Thing

A non-profit organization (NPO) and a registered charity are different legal statuses with different CRA obligations. Only a registered charity can issue official donation tax receipts, and only a registered charity is required to file the T3010 (Registered Charity Information Return) annually.

A non-profit that isn't a registered charity generally can't issue tax receipts for donations, and has different filing obligations, which can include the T1044 (NPO Information Return). Right now, that applies if your passive income — interest, dividends, or rentals — exceeds $10,000 in the fiscal period, your total assets exceeded $200,000 at the end of the previous fiscal period, or you've filed a T1044 before (once you start, you keep filing it going forward). Worth knowing: the federal government has draft legislation working through consultation that would expand this considerably, eventually requiring most NPOs to file something with the CRA annually regardless of size. It hasn't passed yet, but it's a live proposal — worth checking for updates rather than assuming today's thresholds hold indefinitely.

Knowing which one you actually are — and keeping your bookkeeping consistent with your CRA status — matters from day one.

Fund Accounting Separates Money by Purpose, Not Just by Account

Restricted funds — donations or grants given for a specific purpose — need to be tracked separately from unrestricted funds you can use for general operations. This isn't just good practice. It's how you demonstrate to donors, grantors, and the CRA that restricted money was actually spent on what it was given for. Mixing restricted and unrestricted funds into one undifferentiated bank balance makes that demonstration impossible.

Restricted vs. Unrestricted Revenue on Your Books

When restricted funding comes in, record and track it in a way that clearly shows it's earmarked — whether through separate accounts, classes, or fund-level tracking in your accounting software — and only recognize it as "used" as it's actually spent on its intended purpose.

Donation Receipting Has Its Own Rules

If you're a registered charity, official donation receipts must include specific information required by the CRA. Receipting for anything other than a genuine gift — like a ticket to a fundraising dinner, where the donor received something of value in return — requires calculating and disclosing the "advantage" received, not just receipting the full amount paid. Getting this wrong risks the receipt being invalid for the donor's own tax purposes.

What's Different About Non-Profit Bookkeeping

Non-profits and charities generally track the same categories of operating expenses as any business, but revenue is usually broken down by source — donations, grants, program fees, fundraising events — rather than a single sales figure, since funders and your board will want to see where the money actually came from, not just the total.

FAQ

Do all non-profits need to file a T3010? No — only registered charities file the T3010. A non-profit that isn't a registered charity currently needs to file a T1044 only if it has more than $10,000 in passive income, more than $200,000 in total assets, or has filed one in a prior period. That's under active federal review, with a proposal that would eventually require most NPOs to file something annually regardless of size — worth checking for updates rather than assuming the current thresholds are permanent.

Which accounting standards apply to non-profits in Canada? Most Canadian non-profits and charities follow Accounting Standards for Not-for-Profit Organizations (ASNPO) rather than the ASPE standards used by private companies — a distinction worth confirming with your accountant, since it affects how revenue and funds are reported.

Can we use restricted funds for general operating costs if we're short on cash? Not without breaching the terms of the restriction, which can create real problems with the funder and, in some cases, with the CRA. If cash flow is tight, that's a conversation for your board and your accountant, not a bookkeeping workaround.

Fund accounting, restricted revenue, receipting — Margot knows where non-profit bookkeeping genuinely diverges from a regular small business. Ask Margot a question right now.