Why does Permanently Restricted Fund matter for nonprofits?

Boards, auditors, and funders expect clarity on Permanently Restricted Fund because it affects how you report resources, stay compliant, and explain your financial story.

Glossary / Permanently Restricted Fund

What is Permanently Restricted Fund?

A fund where the donor has stipulated that the principal must be maintained in perpetuity.

Simple definition

A fund where the donor has stipulated that the principal must be maintained in perpetuity. Only the investment income can be spent. Under FASB ASU 2016-14, now classified as 'net assets with donor restrictions.'

Why it matters for your nonprofit

When leaders share one clear story about money and mission, donors trust you and audits go smoother. Understanding Permanently Restricted Fund helps your board make decisions without guessing what your numbers mean.

How it shows up in daily work

You will see Permanently Restricted Fund in board packets, grant reports, and donor conversations. The goal is to record activity once and report it consistently—without rebuilding spreadsheets every month.

Common mistakes

Treating restricted resources like general cash because the chart of accounts is not set up for funds.
Letting finance and development use different definitions for the same dollars.
Waiting until year-end to fix coding errors that should be caught monthly.

How Alignmint helps

Alignmint ties fund accounting, donor records, and reporting in one place so terms like Permanently Restricted Fund show up correctly in your books—not only in a policy memo.