Importance of Time Tracking for Non Profits


Why Nonprofits Should Track Time

And how the right time-tracking software can help you stay focused on your organization’s mission.

Time-tracking, as tedious as it sounds, is a necessary practice for every nonprofit group. And the more detailed you can be about it, the better. Beyond reasons for necessity, consistent and accurate time-tracking can offer many advantages to your organization: Accurate time-tracking allows for transparent reporting. It can also help with strategizing ways to improve the organization’s effectiveness. Additionally, it’s necessary for invoicing, understanding where resources are needed within the organization, and managing the nonprofit’s business side—from payroll to programming—effectively. While numerous tools offer options for nonprofits to track employees’ time, it’s important for organization leaders to consider ones that are easy to use and accurately capture the full picture of wage-to-grant allocation across their nonprofit. Here, we dive into exactly why your nonprofit needs to track time and how to choose the right time-tracking system for your organization.

Why is tracking time important?

Nonprofits are required to report to the IRS how they use funds and grants they’ve received. Timekeeping gives a concrete breakdown of how money is distributed among projects, initiatives, wages, and overhead within the organization.

Donors will also want to know how funds are being allocated to projects over the life of grants. If you can demonstrate how your employees’ hours translate into your organization’s programs and initiatives, you help develop donor satisfaction (not a bad thing if you hope to secure future funding).   

Nonprofits that work with clients on a fee-for-service basis also benefit from detailed time-tracking practices. When hourly reporting captures the exact time and activities spent on a specific project, the more accurate you’re able to invoice for it.

Beyond reporting reasons, time-tracking is also essential for managing an organization effectively, from projecting payroll costs to budgeting for unexpected expenses. Leaders who understand how employees spend time across different projects can appreciate the true costs of each program and budget for future projects and initiatives. Additionally, a detailed overview of time spent on each project shows leaders clear pressure points within the organization’s workflow, including when staff might be spending too much or too little time on particular tasks. Armed with information like this, managers can better strategize how to set up their team and organization for success.

How to pick a time-tracking software for your nonprofit

In order to best report and understand how time is spent on projects, nonprofits need to be exact with their time tracking—down to the project and the hour. There are numerous platforms that offer software for organizations and businesses to track time, however, Hour Timesheet is designed specifically for nonprofits. Specific features set Hour Timesheet apart to support the timekeeping nonprofits must do for audit compliance and reporting, as well as ways it can enhance the company as a whole. Here are ways it stands out among other platforms:

What features does Hour Timesheet offer to improve nonprofit time-tracking?


Hour Timesheet is simple, straight forward, and easy to use. It shows a granular breakdown of how the total time that week is spent, including how long you work, how much time you spend on a particular project, and any time-off (distinguished between PTO, sick days, holiday time, parental leave, etc.). Every employee enters their own time into the time sheet, which is then submitted to their manager for approval at the end of each week.

Hour Timesheets does the heavy lifting for their clients. They will set up accounts for employees and 1099 contractors and conduct a short training to introduce the software into the workplace. On the user side, this means just one quick, 45-minute training before the team is off and running (or time-tracking). 

Safeguards against user error

Unlike other timesheets, which can accept time entries days, or even weeks, after a given date, Hour Timesheet requires its users to enter time daily. This minimizes inaccurate estimates of time spent on different projects and generates more transparent reports. It also encourages accountability amongst staff. Beyond the current calendar date, employees are unable to edit past and future entries on their timesheet. Only managers can adjust employees’ timesheets from a past date, and Hour Timesheet includes a feature within the platform for employees to send a written request for an adjustment. Additionally, a supervisor must manually approve each timesheet submission within the organization, which promotes accountability in both employees and employers.

Highly customizable

Each user’s account on Hour Timesheet includes different jobs and service items assigned to them by a manager. By balancing each day’s projects and any time off, employees’ timesheets account for every minute of the business week. Additionally, employees can indicate regular pay hours versus overtime hours versus leave hours, which integrates directly into the organization’s bookkeeping system and streamlines accounting for accurate and on-time payments.

Designed for remote work environments

In a post-Covid world where remote work is on the rise, it remains vital that nonprofits show the total time-to-cost distribution among jobs and programs. Hour Timesheet is accessible from any environment where you can pick up an internet signal. And if you’re on a job site or otherwise away from your typical remote workspace, the Home Timesheet app lets you clock in/out and input time for specific jobs wherever they are.

Streamlines reporting

Hour Timesheet is designed specifically for the type of audit compliance and reporting expected of nonprofits. Daily time entries allow supervisors to pull timesheets and analytics through the “manager view” setting at any time. Additionally, since time is clearly distinguished by job, overhead, leave, and other projects, gathering timesheet reports for specific jobs can happen instantly, without having to sift through hours and entries manually.

Supported by different bookkeeping systems

Hour Timesheet syncs readily with different bookkeeping platforms, like QuickBooks and ADP Run, for efficient accounting and payroll. It will automatically feed data into your books to track of jobs, payroll items, and employees’ time, allowing you to be more hands off. And since the Hour Timesheet team will configure your organization’s timesheets to feed into your bookkeeping platforms, this makes the accounting side of the business easier than ever.

How does Hour Timesheet Improve Bookkeeping?

So, why does Bay Business Group care? For bookkeeping and accounting firms like us, the level of detail Hour Timesheets captures enhances our ability to serve our clients’ accounting needs. When we connect your organization with QuickBooks, we merge your payroll and time data together, and by integrating Hour Timesheets, it streamlines how we pull employee and contractor timesheets, assess job costing, and provides a clear audit trail when it comes to reporting on grants and funds.

Nonprofit leaders don’t have to be bookkeeping savvy to change the world, so that’s where we come in. With the advantages that Hour Timesheet offers to nonprofits, we can help our clients be more hands-free in the accounting side of the business and give them more time to focus on their organization’s main mission.