FASB Gift Definitions
Accounting Requirements
Because of mandated accounting standards established by the Financial Accounting Standards Board (FASB), non-profit organizations are required to report assets and statements of activity under three funds: Unrestricted, Temporarily Restricted, and Permanently Restricted.
Under these guidelines, Unrestricted Fund would include Current Operating Fund, Board Designated Funds (for various projects), and Board Designated Quasi-Endowment. Unrestricted funds are those that may be used for any purpose deemed appropriate for the organization. There should always, of course, be the qualifying statement "within the organization's operating budget" or, perhaps, "deemed appropriate by the board."
Restricted Funds (both Temporarily and Permanently Restricted), however, are those funds that can only be used for the purpose defined. These include donor restrictions and grants, most of which are given for restricted purposes. In addition, the board may also launch campaigns to solicit donations for specific projects. When solicitation is made for a stated purpose, even if the donor does not state specifically in the letter of transmittal that it is restricted, if the donor is responding to a solicitation for a specific purpose, the donation then can be considered restricted.
Temporarily Restricted (designated) Funds include all monies restricted, until expended, by outside donors and grantors. Permanently Restricted Funds are the true Endowment Funds.
