How to Maintain Cash Book, Bank Book & Donation Ledger for a Trust, NGO or Religious Trust

Managing the finances of a charitable trust, religious trust, NGO or other non-profit organization involves much more than recording how much money was received and spent.

A trust should be able to answer simple questions at any time:

• How much cash do we have today?

• How much money is in each bank account?

• How much did we receive through donations?

• Which donations were received in cash, cheque or online?

• What expenses were paid this month?

• Does the cash book match the actual cash?

• Does the bank book match the bank statement?

• Can we provide supporting records during an audit?

This is why maintaining a proper cash book, bank book and donation ledger is so important.

For a small trust, these records may initially be maintained in Excel or physical registers. As the number of donations, expenses, bank transactions and activities increases, maintaining everything separately becomes difficult.

This guide explains a simple and practical way to maintain these records.

Important: The exact accounting and tax requirements applicable to a trust depend on its registration, activities, income, exemptions, donations, FCRA status and other circumstances. This article explains practical record keeping and is not a substitute for advice from your CA or tax professional.

1. What financial records should a trust maintain?

A trust's accounting system should create a clear trail from the original transaction to the final financial report.

A practical setup usually includes:

1. Donation Register / Donation Ledger

2. Cash Book

3. Bank Book

4. Income Ledger

5. Expense Ledger

6. Receipt Vouchers

7. Payment Vouchers

8. Bank Statements

9. Bills and supporting documents

10. Fixed Asset Register, where applicable

11. Project or fund-wise records, where required

12. Financial statements and audit records

The exact books and records required can vary depending on the organization and applicable law.

For eligible charitable or religious trusts, the Income Tax Department provides audit and reporting procedures and forms relating to trust accounts.

The objective is simple:

Every important financial transaction should be traceable.

For example:

Donor → Donation Receipt → Donation Ledger → Cash/Bank Book → Financial Statements

Similarly:

Expense → Bill → Payment Voucher → Expense Ledger → Cash/Bank Book

2. What is a Cash Book?

A cash book records all transactions where physical cash is received or paid.

It should answer one important question:

How much cash should the trust have right now?

Example

Suppose a religious trust starts the day with ₹20,000 cash.

It receives:

• ₹10,000 donation in cash

• ₹5,000 membership contribution

It pays:

• ₹3,000 for cleaning expenses

• ₹2,000 for stationery

The cash position becomes:

Opening Cash: ₹20,000
Cash Received: ₹15,000
Cash Paid: ₹5,000
Closing Cash: ₹30,000

A simple cash book could look like this:

The closing balance should represent the cash physically available with the trust.

3. What is a Bank Book?

A bank book records transactions that happen through a particular bank account.

If a trust has three bank accounts, it is much easier to maintain a separate bank book or account-wise ledger for each account.

For example:

• HDFC Bank, Current Account

• SBI Bank, Savings Account

• Bank FD Account

Example

Suppose the HDFC account has an opening balance of ₹1,00,000.

The trust receives:

• ₹50,000 online donation

• ₹25,000 bank transfer

It pays:

• ₹20,000 electricity bill

• ₹15,000 vendor payment

The bank book would show:

The closing balance should ultimately be reconciled with the bank statement.

4. Cash Book vs Bank Book

The difference is straightforward.

A trust should not mix cash and bank transactions into one unexplained balance.

For example, if a donor transfers ₹25,000 to the trust's bank account, it should increase the relevant bank balance, not the physical cash balance.

5. What is a Donation Ledger?

A donation ledger keeps a structured record of donations received by the trust.

It should ideally capture information such as:

• Donation date

• Receipt number

• Donor name

• Donor PAN, where applicable

• Donation amount

• Payment mode

• Donation category

• Corpus/general donation classification, where applicable

• Bank/cash reference

• Receipt status

For example:

This gives the trust a much clearer picture of its donation income.

6. The most important rule: connect the receipt to accounting

One of the common problems in small trusts is maintaining separate records.

For example:

Excel Sheet 1: Donations
Excel Sheet 2: Cash Book
Excel Sheet 3: Bank Book
Excel Sheet 4: Expenses

A donation might be entered into one sheet but forgotten in another.

A better accounting workflow is:

Cash donation

Donation received

↓

Donation receipt generated

↓

Donation ledger updated

↓

Cash book updated

Online donation

Donation received

↓

Donation receipt generated

↓

Donation ledger updated

↓

Bank book updated

The same transaction should not need to be manually re-entered several times.

This is one reason accounting software can be useful for trusts. TrustSetu, for example, connects donation receipts with income and cash or bank accounting records so that the same transaction does not have to be maintained independently in multiple places.

7. Always maintain supporting documents

A ledger entry by itself is not enough.

Every important transaction should have appropriate supporting documentation.

For donations

Maintain:

• Donation receipt

• Donor details

• Payment details

• Bank or transaction reference where applicable

• Relevant donation classification

For expenses

Maintain:

• Bill or invoice

• Payment voucher

• Payment proof

• Vendor details

• Approval, where applicable

Example

Suppose a trust pays ₹35,000 to an electrician.

Do not record only:

Electricity Expense, ₹35,000

Keep the supporting invoice and payment details with the accounting record.

This makes future verification and audit much easier.

8. Reconcile the Cash Book regularly

A cash book is useful only if it reflects the actual cash available.

At the end of the month:

Cash Book Balance = Physical Cash

For example:

Cash book says:

₹47,500

But physical cash is:

₹44,500

There is a ₹3,000 difference.

Don't simply change the closing balance.

Find the reason.

Possible causes include:

• Missing expense entry

• Incorrect amount

• Duplicate entry

• Cash payment not recorded

• Wrong opening balance

• Receipt recorded incorrectly

A simple monthly cash verification can prevent small errors from becoming large problems.

9. Reconcile the Bank Book with the Bank Statement

Bank reconciliation is equally important.

Suppose the bank book says:

₹4,85,000

But the bank statement says:

₹4,80,000

The difference could be caused by:

• Cheque issued but not yet presented

• Bank charges

• Interest credited by bank

• Direct debit

• Transaction recorded by bank but not yet recorded in books

• Data-entry mistake

Therefore, the trust should periodically compare:

Bank Book ↔ Bank Statement

Do this at least monthly if transaction volume is significant.

10. Don't forget internal fund transfers

Trusts often move money between their own accounts.

For example:

₹1,00,000 transferred from SBI Bank to HDFC Bank.

This is not income.

It is simply a transfer between two accounts owned by the same trust.

The accounting should show:

SBI Bank ↓ ₹1,00,000

and

HDFC Bank ↑ ₹1,00,000

The total money belonging to the trust has not increased.

Similarly, transferring money from cash to bank is not new income.

This distinction is important because incorrectly treating transfers as income can distort financial reports.

11. Keep donation categories separate

A trust may receive money for different purposes:

• General donation

• Religious activities

• Building fund

• Education

• Medical assistance

• Food distribution

• Events

• Specific projects

• Corpus donations, where applicable

Don't simply record everything as:

Donation, ₹10,00,000

A more useful system records the category and relevant restrictions or purpose.

This helps trustees answer:

"How much was received for this particular purpose?"

It also makes reporting and internal decision-making easier.

12. How should a trust handle cancelled receipts?

Suppose a trust creates a donation receipt for ₹50,000.

Later, the transaction is cancelled because of an error.

Simply deleting the receipt can create problems.

The accounting trail should clearly show:

Original receipt → Cancellation → Accounting reversal

The receipt should remain traceable with its cancellation reason.

This is especially important when receipt numbers are sequential.

A good accounting system should therefore support cancellation rather than silent deletion.

TrustSetu follows this approach for its donation receipts. Cancelled receipts remain identifiable, while their corresponding accounting entries can be reversed.

13. A simple monthly accounting process for a trust

If your trust currently uses Excel or physical registers, start with this monthly routine.

Step 1: Record every donation

For every donation:

• Create receipt

• Record donor

• Record amount

• Record payment mode

• Record donation category

Step 2: Update cash or bank records

Cash donation → Cash Book

Bank or online donation → Bank Book

Step 3: Record expenses

For every expense:

• Collect bill

• Create payment record or voucher

• Record expense category

• Record payment mode

Step 4: Reconcile cash

Compare:

Physical Cash ↔ Cash Book

Step 5: Reconcile bank accounts

Compare:

Bank Book ↔ Bank Statement

Step 6: Review outstanding items

Check:

• Unpresented cheques

• Pending deposits

• Unrecorded bank charges

• Missing bills

• Cancelled receipts

• Unidentified transactions

Step 7: Backup records

Keep accounting data and supporting documents organized by financial year.

14. Example: complete donation-to-accounting workflow

Let's take a real-world example.

A donor gives a religious trust ₹25,000 through bank transfer for a temple renovation fund.

At the time of donation

Record:

Donor: Amit Shah
Amount: ₹25,000
Mode: Bank Transfer
Purpose: Temple Renovation
Date: 10 April 2026

Generate:

Donation Receipt: TR/2026-27/0001

Then the accounting flow becomes:

Donation Receipt

↓

Donation Ledger +₹25,000

↓

Bank Book +₹25,000

↓

Bank Balance increases

The transaction should be traceable from the donor's receipt all the way to the bank balance.

This is the level of linkage that makes accounting easier to review.

15. Common mistakes made by trusts and NGOs

Mistake 1: Updating accounts at the end of the year

Don't wait until March to reconstruct the entire year's transactions.

Record transactions regularly.

Mistake 2: Mixing personal and trust transactions

Trust funds should be kept separate from personal funds.

Mistake 3: Not recording small expenses

Small expenses add up and can create differences in cash.

Mistake 4: No supporting bills

Every expense should have appropriate supporting documentation.

Mistake 5: Ignoring bank reconciliation

The bank statement and accounting records should be periodically compared.

Mistake 6: Treating internal transfers as income

Transfers between the trust's own accounts are not donations or income.

Mistake 7: Deleting incorrect receipts

Use a proper cancellation and reversal process and retain an audit trail.

Mistake 8: Maintaining too many disconnected Excel files

When donations, receipts, cash, bank and expenses are maintained separately, duplicate or missing entries become more likely.

16. What about 80G donations?

If the trust is approved under Section 80G, donation records become particularly important.

The Income Tax Department provides specific reporting and certificate requirements for eligible entities under Section 80G, including the reporting of donations and furnishing of donor certificates through the prescribed forms.

This means the trust should maintain accurate donor-level information rather than only recording:

"Total donations received = ₹25 lakh"

You should be able to identify:

• Who donated

• How much

• When

• Through which mode

• Relevant donor details

• Receipt or certificate information

Because tax rules and forms can change, trusts should verify the applicable requirements for the relevant tax year with the Income Tax Department or their CA.

17. Should you use Excel or accounting software?

Excel can work for a small trust with very few transactions.

But consider moving to dedicated accounting software when you have:

• Hundreds of donations

• Multiple bank accounts

• Regular expenses

• Multiple donation categories

• Multiple people entering data

• Large member databases

• Frequent receipt generation

• Audit requirements

• Multiple projects or funds

The biggest advantage is not simply "digital accounting."

It is connected accounting.

Instead of:

Donation → Excel

and separately:

Receipt → PDF

and separately:

Bank → Excel

you want:

Donation → Receipt → Ledger → Cash/Bank → Reports

For a trust that is growing, that connection can save significant manual work.

18. How TrustSetu can simplify this process

TrustSetu is designed specifically for Indian trusts, religious organizations, charitable trusts, NGOs and non-profit organizations.

Instead of maintaining separate systems for members, donations and accounting, TrustSetu brings these workflows together.

You can manage:

• Donation receipts

• Donor and member records

• Income ledger

• Expense ledger

• Cash book

• Bank book

• Bank accounts

• Receipt and payment vouchers

• Financial reports

• Donation categories

• Trust records

Donation receipts can also flow into the accounting records, reducing duplicate data entry.

So the goal isn't simply to replace an Excel sheet.

The goal is to create a connected record:

Donor → Receipt → Accounting → Cash/Bank → Reports

If your trust is currently maintaining separate Excel files for donations, expenses, cash and bank transactions, this is one area where moving to a dedicated trust management system can make day-to-day administration considerably easier.

Explore TrustSetu

19. Simple checklist for your trust

Use this checklist every month:

Donations

• Every donation has a receipt

• Donor details are recorded

• Payment mode is correct

• Donation category is correct

• Cancelled receipts are properly recorded

Cash

• Cash book is updated

• Physical cash matches book balance

• Small expenses are recorded

• Opening and closing balances are verified

Bank

• Every bank transaction is recorded

• Bank book is updated

• Bank statement is reconciled

• Bank charges and interest are recorded

• Outstanding cheques are reviewed

Expenses

• Bills and invoices are available

• Payment records and vouchers are maintained

• Expenses are assigned to appropriate heads

• Payments are properly authorized

Year-end

• Cash balance verified

• Bank accounts reconciled

• Donation records reviewed

• Expense records reviewed

• Supporting documents organized

• CA or auditor provided with required records

Conclusion

Maintaining a cash book, bank book and donation ledger is not just about satisfying an accounting requirement.

It gives trustees a clear picture of how the organization's money is received, where it is kept, and how it is spent.

For a small religious trust, charitable trust or NGO, a simple Excel-based system may be enough in the beginning. But as donations, members, expenses and bank transactions grow, disconnected records become harder to manage.

The ideal system is one where every transaction has a clear trail:

Donation → Receipt → Ledger → Cash/Bank → Expense → Reports

That makes accounting easier, improves transparency, reduces duplicate data entry and makes it much easier to prepare records for review or audit.

For organizations looking to move from scattered registers and Excel sheets to a connected digital workflow, TrustSetu provides a purpose-built platform for managing trust operations, donations and accounting in one place.

Visit TrustSetu

Sources & Further Reading

• Income Tax Department: Form 10B guidance

• Income Tax Department: Trust and NGO tax return guidance

• Income Tax Department: Form 10BD and Form 10BE guidance

• Income Tax Department: Section 80G FAQs

• Income Tax Department: Income-tax forms and downloads