A charity’s bookkeeping needs to capture five things continuously: every item of income tagged to the fund it belongs to, the declarations and records behind any Gift Aid claim, grant agreements alongside spending against them, receipts and invoices for every payment, and a bank reconciliation done regularly rather than annually. Get those five habits established and year-end accounts become an assembly job instead of an archaeology project.

This guide covers charities registered in England and Wales. Charities in Scotland and Northern Ireland follow different rules set by their own regulators. Here is the working checklist, and the reasoning behind each line.

Which charities this applies to

Every registered charity, whatever its size, and any community group handling money it holds for others. Treasurers usually own the task day to day, but trustees remain responsible for the records existing at all, so the checklist doubles as a governance check.

The charity bookkeeping records checklist

These are the records a charity is expected to keep:

  • Bank statements for every account, filed and reconciled
  • An income record showing date, source, amount and fund for every receipt
  • Gift Aid declarations and a log of claims made
  • Grant offer letters, funding agreements and reporting conditions
  • Invoices or receipts for every payment, referenced to the bank entry
  • A petty cash log, if cash is handled at all
  • Records of fundraising event takings
  • Payroll records, if the charity employs anyone
  • Minutes recording trustee decisions with financial consequences

Sitting alongside them are controls we recommend rather than records the law demands. Cash takings counted and signed off by two people is the main one: it is Charity Commission best practice on internal controls, and it is what turns a takings figure into something an examiner can rely on.

Tagging income to funds as it arrives

The single habit that separates easy charity year ends from hard ones is recording the fund against each receipt on the day it is recorded. A donation for general use, a grant for a named project and proceeds from a restricted appeal all look identical on a bank statement. Six months later nobody remembers which was which. The distinction matters legally, not just cosmetically, as we explain in restricted and unrestricted charity funds.

Evidence behind Gift Aid

Gift Aid claims must be supported by valid donor declarations and records linking each claimed donation to a declaration. Keep declarations for as long as GOV.UK requires, log every claim submitted, and reconcile claim receipts to the bank. The tax rules for charities, including record requirements, are set out in the GOV.UK guidance on charities and tax.

Grants: the paperwork on both sides

For each grant, keep the offer letter, the terms, and a record of spending against it. Funders increasingly ask for spending reports in their own format, and a grant record kept from day one produces those reports in minutes. It also feeds directly into the fund analysis your accounts must show, which we cover in what charity accounts should include.

Reconciliations: little and often

Reconcile every bank account monthly if you can, quarterly at worst. A reconciliation done soon after the period catches errors while the transactions are still recognisable. One done a year later turns every unexplained difference into an investigation.

Errors that surface at examination

  • Income banked in lump sums with no breakdown of what it contained
  • Gift Aid claimed against donations with no traceable declaration
  • Restricted grant money spent from the general account with no cross record
  • Cash collections recorded only as the amount banked, with no count sheet
  • Volunteer expenses reimbursed without receipts

Each of these creates work, and sometimes qualifications, when the accounts reach an independent examination or audit.

When a charity should hand bookkeeping over

Volunteer treasurers manage perfectly well until volume, staff or multiple funders arrive. If reconciliations are slipping, or the treasurer role has become hard to fill, paid support is cheaper than untangling a year of gaps. Our bookkeeping service runs fund-tagged records for charities through the year.

Frequently asked questions

How long should a charity keep its financial records?

Retention periods are set out on GOV.UK and differ by record type, with tax-related records carrying their own requirements. As a working rule, keep everything for at least the statutory period and grant records for as long as the funder’s terms require.

Does a small charity really need to record funds separately?

Yes, if it has ever received money given for a specific purpose. The duty to apply restricted money as intended does not depend on the charity’s size, only on how the money was given.

Who should have access to the charity’s bank account?

More than one person, with dual authorisation on payments where the bank supports it. Sole control by one individual is the most common control weakness examiners raise, however trusted that individual is.

Can we keep charity records in a spreadsheet rather than software?

Yes. A well-structured spreadsheet with a fund column, kept reconciled, satisfies the requirement. Software helps most once transaction volume grows or several people need access at once.

How we can help

Our charity accounting support includes setting up fund-based bookkeeping that keeps these records right through the year. Request a quote and we will match the record keeping to the size of your charity.