How Do I Set Up Xero for a Charity or Not-for-Profit? A Step-by-Step Setup Guide

Last updated: 25 October 2026.

Xero is a popular choice for Australian charities and not-for-profits because it is cloud-based, shares easily with boards and bookkeepers, and connects to bank feeds, payroll and donor apps. A good setup takes a few hours; a poor one creates months of clean-up. This guide walks through the order we recommend, using Xero’s own help pages and offer terms (checked 25 October 2026), and points out the charity-specific decisions to make first.

Xero’s pricing and discount offers change often, so we do not quote plan prices here. Check the links in the sources section for the current terms.

The short version: (1) claim a non-profit discount if you are eligible, (2) choose a conversion date at the start of a month, ideally the start of your financial year, (3) set your financial settings, (4) build your chart of accounts, (5) set up tracking categories for grants, programs or funds, (6) connect bank feeds, (7) set user roles and lock dates, and (8) agree a monthly routine.

Step 1: Check the non-profit discount routes

There are two routes we have seen published. Both change from time to time, so confirm the current terms before you subscribe:

  • Direct from Xero. Xero’s non-profit page offers 25% off for registered not-for-profit organisations on a business pricing plan. The discount is applied after you subscribe and Xero confirms your status. You raise a case in Xero Central with evidence of eligibility (such as your charity number or certification) during the free trial or within 31 days of subscribing.
  • Via Connecting Up. Connecting Up’s offer page describes a 40% discount for three years (36 months) on new Xero business edition subscriptions for eligible nonprofits, with a non-refundable administration fee of A$15 (ex-GST). Connecting Up’s eligibility guidance says organisations need an ABN and must be listed on the ACNC Register or have income tax exempt status recognised on the Australian Business Register (self-assessing organisations must supply extra evidence). You then pay Xero directly. It applies to new subscribers only, requires a credit card, and the page states that extra charges such as payroll or certain direct bank feeds are not discounted. After the discount period the subscription continues at the then-current rate.

Connecting Up’s page also says Xero Coach onboarding is included in the first 90 days of your Xero subscription. Check eligibility and terms with Xero and Connecting Up before committing. Do not cancel an existing subscription to chase a discount without confirming you are eligible.

Step 2: Decide your conversion date and balances

If you are moving from spreadsheets or another system, Xero’s conversion guidance says your conversion date is the date you start recording transactions in Xero, and it is always the first of a month. Your conversion balances are the closing balances from your previous system on the day before the conversion date, taken from a trial balance report. Enter them accurately, including opening balances for each bank account.

For charities, the cleanest conversion date is usually the first day of your financial year (1 July for most), so a full year sits in one system and your annual financial report draws from one set of records. A mid-year start is possible, but needs extra care for year-to-date figures and grants already partly spent. Make sure restricted and unspent grant balances are carried across and identified.

Step 3: Set your financial settings

In Xero’s financial settings you set your financial year end, GST and activity statement settings, tax defaults, time zone and lock dates. Key points from Xero’s help page:

  • Financial year end. If you do not choose one when you add the organisation, Xero sets 30 June. Match it to your charity’s reporting period on the ACNC Charity Register. Xero recommends avoiding changing the year end after you have used Xero for previous years.
  • GST and activity statements. Choose the GST accounting method and calculation option that match your ATO registration. If you are not registered for GST and only run instalment activity statements, Xero explains the settings to choose. Many charities are GST-registered only when turnover or choice requires it. See our guide to GST for charities.
  • Lock dates. Lock dates stop users adding or changing transactions on or before a date, and can apply to all users or only to non-administrators. Only administrators can set them. Locking each month once reconciled, and locking the year after your review or audit, protects the figures your board and auditor have seen.

If you are unsure about any setting, ask your bookkeeper or adviser, as Xero itself recommends.

Step 4: Build a chart of accounts that suits a charity

Your chart of accounts determines every report you will produce. For charities, design it around how you report: income by source (donations, grants, fundraising, fees), expenses by nature, and separate treatment for restricted funds. Two options:

  • Start with Xero’s default and edit it.
  • Import your own. Xero’s import guidance says you can import up to 1,000 rows including the header, recommends no more than 699 accounts per organisation for performance, and warns that accounts missing from the file are archived. Account codes can be up to 10 characters and must be unique. Check that the tax rates in the file exist in Xero or they default to No GST (0%). Bank accounts must use No GST.

The National Standard Chart of Accounts (NSCOA) is free, optional and accepted by all Australian governments. The ACNC maps the financial questions in the AIS to it. Using it, or mapping to it, can simplify reporting, but you do not have to. Xero does not use sub-accounts; it uses tracking categories instead (next step). For design guidance, see our chart of accounts for fund accounting guide.

Step 5: Set up tracking categories for grants, programs and funds

Xero uses tracking categories and options instead of department codes or cost centres. This is how most charities track grants, programs, sites and restricted funds, without multiplying accounts. The limits from Xero’s help page matter in design:

  • A maximum of four tracking categories in total, and only two active at any time.
  • Each category can have multiple options, and a category needs at least one option before you can tag transactions.
  • Xero recommends no more than 100 options per category so reports load quickly.

So you will not be able to track everything. A common pattern is one category for Program or fund and one for Grant or funder. Decide the two you need most before you start tagging, and write the rules down so every user tags consistently. Our grant acquittal guide shows a worked example.

Step 6: Connect bank feeds

Bank feeds automatically import transactions from your bank into Xero ready to reconcile. Xero describes direct feeds (where it has an agreement with the bank), aggregator-supplied feeds, credential-shared feeds that usually need manual refreshing, and PayPal and Stripe feeds. Xero notes it relies on banks to make transactions available, so recent transactions may not appear instantly. To check availability, add the bank account in Xero and search for your bank; if it says “Manual upload” a feed is not available and you can import statements instead.

Connect every account the charity uses, including credit cards, fundraising platforms and payment processors, so the books are complete. Set a rule that all income and spending flows through bank accounts that can be reconciled.

Step 7: Set up users and controls

Xero’s administrator role gives full access to all areas, including settings, manual journals, lock dates, and editing users. Keep administrators to a minimum (two is a sensible number so there is a back-up) and give staff and volunteers a role with only the access they need. For example, someone who raises bills does not need to change bank details. Pair this with an approval process. See our guide to internal controls for NFPs. If you work with a bookkeeper, you can invite them into your organisation, as Xero’s conversion guide suggests.

Step 8: Payroll, apps and the monthly routine

If you have employees, Xero states that it complies fully with Single Touch Payroll (STP), and you can send reports to the ATO each payday. Before you run your first pay, confirm award rates, leave, super fund details and Payday Super timing. See our STP basics and Payday Super guide.

Agree a monthly routine: reconcile all accounts, review unreconciled items, check grants against budgets by tracking option, produce a board report, then lock the month. Our treasurer’s report template is a good starting point.

Common setup mistakes

  • Converting mid-year without carrying restricted-fund balances across.
  • Copying a commercial chart of accounts that cannot show grants or programs.
  • Using up the tracking categories on the wrong things.
  • Too many administrators, no lock dates, and no check of conversion balances against the old trial balance.

How we help

We set up and maintain Xero for Sydney charities and not-for-profits: conversion and opening balances, chart of accounts, tracking categories for grants and funds, bank feeds, user roles and a monthly reconciliation and board-reporting routine. We quote a fixed fee after a quick scope call. Try our free Charity Health Check, read about our support for charities and NFPs, or email info@guidancegrowth.com.au.

Frequently asked questions

Does Xero offer a discount for charities in Australia?

Xero’s non-profit page offers 25% off for registered not-for-profits on a business pricing plan once your status is confirmed. Connecting Up offers 40% off for 36 months for eligible nonprofits on new Xero business edition subscriptions, with a non-refundable A$15 (ex-GST) administration fee. Terms change, so check both pages.

What conversion date should a charity use in Xero?

Xero conversion dates are always the first of a month. For most charities the start of the financial year (1 July) is cleanest, because a full year of transactions then sits in one system.

Can Xero track grants and restricted funds?

Yes, using tracking categories. Xero allows a maximum of four tracking categories in total, only two active at a time, and recommends up to 100 options per category.

Do charities have to use the National Standard Chart of Accounts?

No. The ACNC says NSCOA is optional, though all Australian governments accept it and the ACNC maps AIS financial questions to it.

Does Xero support Single Touch Payroll?

Xero’s non-profit page states that Xero complies fully with STP, so you can send reports to the ATO each payday. Check your own payroll settings and obligations before the first pay run.

Who should be a Xero administrator?

Keep administrator access to a small number of trusted people. Administrators have full access, including settings, manual journals, lock dates and managing users.

Sources and further reading

This article is general information, not personal advice. Rules and dates can change, so check ato.gov.au or acnc.gov.au for the latest, or speak to us about your situation.

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