Money that is given to a non-profit/charitable organization by a donor is free to use as they see fit. For example, when given a donation of unrestricted funds by an individual, a non-profit organization might allocate their use toward helping offset the organization’s operating costs such as rent, labor costs and utility bills.
  • It is also known as current unrestricted funds.
  • This type of funds contains no restriction resources and the charitable company can use the amount in fund as it chooses to carry out the purposes for which the organization exists.
  • This means that these funds can be spent in their own right, or can be added to a restricted fund which does not have enough money to cover its expenditure.
  • In unrestricted fund analysis. all unrestricted contributions, gifts and other income should be recorded in this fund
  • The unrestricted funds are funds that are expendable at the discretion of the governing board members in furtherance of the charity’s objects.
In unrestricted funds analysis, unrestricted funds comprise:
  • General funds
      • General funds are unrestricted funds which have not been earmarked and may be used generally to further the charity’s objects.
      • When charity firms are reviewing a set of charity accounts, they will usually be presented with a columnar format in the statement of financial activities (replacing the profit and loss account) showing the income and expenditure belonging to each fund
  • Designated funds
      • Designated funds are unrestricted funds that have been earmarked for a particular purpose by the trustees.
      • The notes to the accounts should explain the purpose of designated fund.
      • Designated funds are often endowed in perpetuity with the income used to support the organization.
  • In unrestricted funds analysis, the unrestricted funds are expendable at the discretion of the governing board members in furtherance of the charity’s objects
  • Funds raised by a branch for the general charitable purposes of the reporting charity shall be accounted for as unrestricted funds in the financial statements of the reporting charity.
Unrestricted funds can be used to supplement expenditure made from restricted funds