Running a nonprofit comes with unique challenges, especially when managing payroll. You need to pay not just staff, but sometimes contractors, board members, and even volunteers — all while staying compliant and maximizing every dollar for your mission. Choosing the right payroll software can save time, reduce errors, and help ensure financial transparency to donors and stakeholders.
Here are some of the top payroll software options for nonprofits, what makes them ideal for mission-driven organizations, and how to pick the right one for your group.
Why Nonprofits Need Specialized Payroll Software
-
Complex Compliance: Nonprofits often have different tax obligations (e.g., FUTA exemptions, grant-funded payroll) and must comply with nonprofit accounting standards.
-
Multiple Types of Payments: It’s not just full-time staff — there may be 1099 contractors, part-time workers, volunteers, and board members.
-
Budget Constraints: Many nonprofits operate on tight margins, so cost-effective solutions are crucial.
-
Transparency & Reporting: Nonprofits often need detailed payroll reports for auditing, funders, and internal accountability.
Top Payroll Software for Nonprofits
Here are some of the best payroll platforms that nonprofits typically use, along with their key features and pros & cons.
1. Gusto
Why It’s Great for Nonprofits
-
All-in-one payroll + HR platform.
-
Handles contractor payments (1099), volunteers, and staff.
-
Integrates with nonprofit-specific accounting tools like Aplos.
-
Automatically files federal, state, and local payroll taxes.
Pros
-
Very user-friendly interface
-
Strong compliance support
-
Good integration ecosystem
Cons
-
Pricing can scale up as staff grows
-
Not the cheapest option for very small nonprofits
2. Rippling
Why It’s Great for Nonprofits
-
A unified platform: Payroll, HR, IT, and spend management all in one.
-
Automates tax filings across federal, state, and local levels.
-
Customizable reporting — you can produce detailed payroll reports for transparency.
-
Scalable: good for nonprofits that are growing.
Pros
-
Highly flexible and modular
-
Great for integrated workforce management
-
Powerful data and reporting tools
Cons
-
Might be overkill for very small nonprofits with simple payroll needs
-
More expensive because of its broad feature set
3. OnPay
Why It’s Great for Nonprofits
-
Specifically supports 501(c)(3) nonprofits.
-
Handles payroll for W-2 employees, 1099 contractors, volunteers, and board members.
-
Automates payroll tax filing and FUTA exemptions (relevant for many nonprofits).
-
Integrates with accounting and time-tracking tools.
Pros
-
Nonprofit discount available
-
Reliable and purpose-built for nonprofit payroll complexity
-
Transparent and simple pricing
Cons
-
Not a full HR suite — mostly focused on payroll
-
Fewer advanced HR features compared to larger platforms
4. Netchex
Why It’s Great for Nonprofits
-
HR + Payroll in one platform built specifically for nonprofits.
-
Manages the full employee lifecycle: hiring, payroll, benefits, and compliance.
-
Designed to reduce administrative burden so nonprofits can focus more on mission work.
-
Good scalability: built for organizations that may grow or have changing payroll needs.
Pros
-
Strong nonprofit focus
-
Integrated HR and payroll
-
Good reporting and compliance capabilities
Cons
-
Pricing usually by quote (might be harder to estimate cost)
-
May be more than what a very small nonprofit needs
5. Paypro
Why It’s Great for Nonprofits
-
Specialized nonprofit HR & payroll platform.
-
Automatically updates to reflect the latest withholding laws and nonprofit tax requirements.
-
Cost center allocation: allows you to allocate payroll to different funding sources (like grants) for more accurate reporting.
-
Detailed nonprofit-specific reporting, which can help when presenting to donors or funders.
Pros
-
Built for nonprofits’ financial reporting needs
-
Excellent compliance support
-
Useful analytics for donor-funded payroll
Cons
-
Might have a steeper learning curve
-
Custom features could mean higher pricing
6. Xero Payroll (for Nonprofits)
Why It’s Great for Nonprofits
-
Xero’s accounting + payroll system works well for nonprofits.
-
Supports multi-user access and good automation tools.
-
Customizable nonprofit reporting: essential for grants, donors, and board transparency.
-
Can integrate with other nonprofit-friendly apps via Xero’s App Store.
Pros
-
Strong accounting-payroll integration
-
Scalable and flexible
-
Good for organizations that already use Xero accounting
Cons
-
Payroll is less “specialized” for nonprofits compared to some other tools
-
May require more setup for nonprofit-specific reporting
How to Choose the Right Payroll Software for Your Nonprofit
Here are some key factors to consider when selecting payroll software:
-
Size of Your Team
-
Small nonprofits (just a few staff/contractors): cheaper, simpler tools may suffice (e.g., OnPay or Xero).
-
Growing nonprofits: consider scalable platforms (e.g., Rippling, Netchex).
-
-
Types of Payees
-
Do you pay employees, contractors, and volunteers?
-
Do you pay board members or people on grant-funded payroll? Choose software that supports multiple payee types.
-
-
Compliance Needs
-
Do you need FUTA-exemption handling?
-
Are you operating in multiple states (or countries)?
-
Do you need detailed cost-center reporting (for grant funding)?
-
-
Budget Constraints
-
Compare monthly costs, per-employee fees, and any discounts for nonprofits (some platforms offer reduced pricing).
-
Factor in setup costs, especially for systems that require manual configuration or integration.
-
-
Integration & Reporting
-
Do you already use accounting software? Ensure payroll integrates smoothly.
-
Do you need reporting for donors, board members, or audits? Choose a system with strong reporting capabilities.
-
-
Support and Usability
-
Does the software provider have good customer support?
-
Is the platform user-friendly for non-technical staff?
-
Does it offer self-service for employees or contractors?
-
Final Thoughts
Choosing the right payroll software for your nonprofit isn’t just about cutting costs — it’s about efficiency, compliance, and transparency. The right system will minimize administrative burden, help you better allocate staff costs across grants, and provide clear, auditable reports.
-
If you’re a small nonprofit, OnPay or Xero might give you just what you need without overpaying.
-
If you’re scaling or have more complex payroll needs, Rippling or Netchex offer powerful, integrated platforms.
-
For donor-funded payroll, Paypro’s cost-center capabilities are especially valuable.
-
For all-around performance, Gusto remains a top pick thanks to its usability and nonprofit-focused features.
0 Comments