Fund Accounting 101: Basics & Unique Approach for Nonprofits
Oct 26, 2023
You receive donations or grants designated for a specific purpose that you have to spend within a calendar year. For instance, if you receive a donation explicitly for cancer-suffering children, you can’t use that fund for HIV or any other life-threatening diseases.
As you are not free to use funds however you please, it is called restricted funds or donor-designated funds. The complexities of restricted funds present unique nonprofit bookkeeping and accounting challenges, which is not the case in regular accounting.
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