3. Add your Programs

Nonprofits track their expenses by function. They do this in 3 main categories: Administration, Fundraising, and Program. These tie in directly to the 990 reporting. You will use Classes in QBO to track your functional expenses.

Before we get into setting up your Classes and chart of accounts, here’s a quick rundown of how these will function and interact in QBO.

Every transactions you enter to QBO will include an Account and a Class.

Accounts track WHAT. What is this thing we bought? It’s supplies, or it’s insurance, or it’s training.

Classes track WHY. Why did we buy this thing? We bought it because we need it for the music program, or we need it in the office, or we need it for this fundraising event.

So if you bought a harmonica (what) for the music program (why), then when you do the entry in QBO you will record it in the Supplies Account (or maybe a more specific account, like Instruments, depending on how you set up your COA) and the Music Class.

If you’re still figuring out exactly what your programs are, getting your classes set up may require some trial and error, and that’s totally fine. Think of the main services that you provide as an organization. You may only have one program! Try not to get too granular, but choose the programs that make sense for your organization. If it turns out you set up too many or too few programs, then you can always adjust the classes in QBO. 

As an example, let’s say you’re setting up a new nonprofit that provides after-school programming. There are two programs you plan to offer. One is a tutoring service for older children so they can come by after school, work on their homework together, and get help from the supervising tutor as needed. The other is a music program for younger children who will learn to play instruments and play games that integrate musicality. The class list in QBO for that might look like this:

• Admin
• Fundraising
• Tutoring
• Music

If you want to get more granular by tracking different areas of Fundraising, you can set up the classes like this:

• Admin
• Fundraising
  • General Fundraising
  • Year-end appeal
  • Bake sales
• Program
  • Tutoring
  • Music

The reports for the first example will be a little clearer to read, but if you really do have more categories that you want to track, like in the second example, then go for it. To keep things clear and easy, parse it down as much as possible while still tracking what’s important for your organization to know.

Once you have your list together, follow these instructions to add it to QBO:

Navigation: Gear icon > All Lists

Navigation: Classes

If you don’t see Classes as an available option, go back to the Setup step of The Guide to see how to activate this option.

Navigation: New

Enter the class name

In this screenshot, I’m entering the Admin class. You will Save, then do this again for Fundraising, and for each program.

To create a subclass

Check “Is sub-class” and choose the parent class. In this example, Community Outreach is a Program, so the parent class is Program.