Software for NGOs and charities: donors, grants and restricted funds

The short answer

For most small charities, the right software is an established charity CRM and an accounting package that can report by fund, configured properly and connected so a donation is entered once. That is not a sales line; it is the honest starting point, and building anything bespoke before those two agree with each other is usually money spent in the wrong place.

The harder question is not which product to buy. It is whether, on any given day, you could tell a funder exactly what their money has done. Charities that can answer that from the records the team already works in have their systems right. Charities that answer it with a spreadsheet assembled the week before the deadline do not, whatever software they own. This article uses UK rules; other countries differ.

The systems a charity actually runs on

• Donors and fundraising. Who gave, how, how often, what they agreed to hear about — see CRM.
• Gift Aid. Declarations, eligibility and claims, with the records kept for as long as HMRC requires.
• Grants and restricted funds. Money given for a stated purpose, which has to be spent on that purpose and reported against it.
• Finance. Accounts that can report by fund, not just by department — see finance.
• Volunteers. Availability, rotas, checks and hours — see operations and scheduling.
• Beneficiary and case records. The people you actually help, and what happened to them.
• Safeguarding. Concerns, actions and outcomes, under the tightest access of all.
• Impact reporting. Turning all of the above into something a trustee, funder or regulator can read — see reporting.

The difficulty is that a single grant touches almost every one of these: the funder is a donor record, the money is a restricted fund, the spend is in finance, the outcomes are in beneficiary records, and the report has to pull all of it together.

Restricted funds are the hard part

Unrestricted donations can be spent on anything within the charity's purposes. Restricted funds cannot: the money was given for a stated purpose, it must be spent on that purpose, and the charity has to be able to show that it was. The new Charities SORP, which applies to accounting periods beginning on or after 1 January 2026, also brings clearer rules on when grant income with performance conditions should be recognised, which makes tracking those conditions a systems question as well as an accounting one.

The workload comes from reporting cadence. Take an illustrative charity holding 12 restricted grants, each reporting quarterly:

12 × 4 = 48 funder reports a year — 48 ÷ 52 ≈ nearly one every week, each needing spend by fund, what was delivered and who benefited.

If spend is allocated to funds only when a report is due, every one of those 48 reports starts with an archaeology exercise. If it is allocated when the transaction is recorded, the report is largely a query.

Gift Aid, in arithmetic

Gift Aid adds 25p for every £1 a UK taxpayer donates, provided the charity holds a valid Gift Aid declaration. Every £1,000 of eligible donations is therefore worth £250 — and every £1,000 given by eligible UK taxpayers without a declaration being captured is £250 the charity does not receive.

Small donations of £30 or less can also attract top-up payments under the Gift Aid Small Donations Scheme, without declarations, on up to £8,000 of donations a tax year: up to £2,000, subject to HMRC's eligibility conditions for the scheme.

The systems point is records. A charitable company must keep Gift Aid declarations and records until six years after the end of the accounting period they relate to. A declaration that lives in a paper file, a scanned email or a former fundraiser's inbox is a declaration you may not be able to produce when asked.

Where the hours actually go

1. The same donor, twice

A donation is recorded in the fundraising system and again in the accounts, and the two are reconciled at month end. Each re-entry is small; across a year of donations it is not, and every mismatch is a query someone has to chase.

2. Allocating spend to funds after the fact

Invoices coded to a department but not to a fund have to be revisited before every report. This is the single most common reason funder reports take days rather than hours.

3. Assembling reports from several places

Spend from finance, activity from the programme team, outcomes from case records, stories from staff. When none of those share a record, the report is rebuilt by hand each time.

4. Volunteers and checks

Rotas, availability, training and background checks tracked in separate lists, with renewal dates held in someone's memory.

None of these is caused by a bad product. They are caused by good products that do not talk to each other — the same pattern we see in lettings agencies and colleges.

Measuring it for your own charity

A worked example with illustrative inputs:

• 48 funder reports × 6 hours of assembly = 288 hours
• 2,000 donations a year × 2 minutes of re-entry into the accounts = about 67 hours

That is about 355 hours a year, or 6.8 hours a week. Multiply the weekly figure by 4.33 for a month (about 29.5 hours) and divide by 162.5, the hours in one UK full-time month: roughly 0.18 of one person. Almost all of it is report assembly.

Replace every input with your own: time one real funder report from first request to submission, and count how many places a single donation is typed. If your numbers are small, keep what you have and spend the effort on allocating spend to funds at the point of entry, which costs nothing but discipline. The method is the same one we use for automation time savings generally.

Buy, connect or build

Buy when you are small and your work fits the shape charity products assume. Configure the CRM and the accounts properly, and make funds and Gift Aid declarations first-class records from day one.

Connect when you have two good systems that disagree. Letting a donation flow once from fundraising into the accounts, with its fund attached, removes the most common reconciliation without replacing either product. We cover the general version of this decision in bespoke CRM vs off-the-shelf.

Build when donors, grants, volunteers and beneficiaries genuinely need to share one record, one login and one audit trail, and the measured hours say the seams are costing real staff time. That is the shape of the NGO platforms we deliver: one record, with access controlled by role so a fundraiser never sees a case note.

Donor and beneficiary data

Charities hold two very different kinds of personal data. Donor records are ordinary personal data with their own rules on consent and marketing. Beneficiary and case records can include health and other information that UK GDPR classes as special category data, which carries stricter conditions.

Whatever software you use, three things are worth insisting on: access by role, so people see only what their job needs; an audit trail of who viewed and changed what; and safeguarding records held under tighter control than anything else. Take your own data protection advice on the lawful basis for each kind of record.