Glossary / Restricted Fund
What is Restricted Fund?
A fund containing resources that can only be used for a specific purpose designated by the donor.
Simple definition
A fund containing resources that can only be used for a specific purpose designated by the donor. Restrictions can be temporary (time or purpose) or permanent (endowment). Proper tracking is essential for compliance.
Why it matters for your nonprofit
Donors, grantors, and boards expect restricted dollars to stay tied to their purpose. Mixing restricted and unrestricted cash is one of the fastest ways to lose trust or fail an audit.
How it shows up in daily work
You tag each gift and expense to a fund, run fund-level balance reports monthly, and show the board how much remains in each restricted pool.
Common mistakes
- Spending restricted gifts on general operating costs because funds were not set up in the chart of accounts.
- Reporting fund balances from spreadsheets that do not match the general ledger.
- Waiting until the grant report is due to discover expenses coded to the wrong fund.
How Alignmint helps
Alignmint ties fund accounting, donor records, and reporting in one place so terms like Restricted Fund show up correctly in your books—not only in a policy memo.
FAQ
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