Recording donations in QuickBooks is typically done using a sales receipt, which both records the information correctly and allows you to easily print or email a donation receipt.
When creating a sales receipt in QuickBooks, you’ll need to use a product. A common mistake is creating too many products. Only create a new product when you need to track a distinct type of donation separately, particularly if it requires unique reporting.
For example, a cash donation collected at a silent auction might be unrestricted funds, while donations raised specifically for a roof repair project would be classified as restricted funds. In such cases, you would need separate products for each donation type. The silent auction donations would go into the unrestricted funds account, while the roof repair donations would be allocated to the roof repair fund.
When setting up a product, you specify which income account the funds will be deposited into, so having one product for each donation category ensures that funds are properly tracked.
To avoid unnecessary clutter, only create new products when there’s a clear need to differentiate income streams. Typically, one product per income account or donation category is sufficient. Well-defined products help streamline donation tracking and reporting.
Let's get Started
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Click on the magnifying glass in the top right.
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Type in product. In the search results, click Products and Services.
Click the New button.
Select Service as the product type.
Give the product a clear name, like Donation - Unrestricted or Donation - Roof Repair Fund. This will be the product name on the donation receipt as well as what you will see on your internal reports
Enter a Description. This will display as the description on the donation receipt.
Leave the price blank. You can enter this at the time you create the sales receipt.
Assign the appropriate Income Account. The account selected here dictates which income account will be credited with the payment. For our example, we would likely find accounts named something like Unrestricted Contributions or Restricted - Roof Repair Fund. If you're unsure which account to choose, it's a good idea to consult with your bookkeeper or accountant for guidance.
Click Save and close.
That's it! You have created a product to be used when recording a donation with a sales receipt.
Setting up products for tracking donations makes it easy to see the funds you've collected by restriction and fund, separate from any other contributions. It a