A reserved form of money that must be utilized for peculiar aims and purposes is called a “RESTRICTED FUND”. The reassurance is made to “DONORS” regarding the fact that their Contributions will be utilized in accordance with the fashion that they have selected and opted and the purpose of the reassurance is achieved by the “Restricted Funds”.

The pecuniary amounts that are provided to either the Company that operates for the work of Charity or to the Non-Profit Organization by a Donor, must be distinctively and inevitably manifested as an “UNRESTRICTED GIFT” and such amounts can then be utilized for the fulfilment of any aim or target related to the organization.

The Fund Monies that are rendered as a “RESTRICTED PROVISION” for a temporary period then these amounts can only be utilized for a particular type of purpose. If the Funds have been provided as “RESTRICTED MONIES” on a permanent basis then Donations will be acting as “PRINCIPAL” for the acquirement of “INTERESTS” with the limitation of spending the Interest amounts only.

THE COMPRISES AND ADJUSTMENTS RELATED TO THE PROVISION OF “RESTRICTED FUNDS”:

• Funds that are based on “Restricted Incomes”.
• Funds for the sake of “ENDOWMENTS”.
• The Restricted Funds are subjected to the particular type of “TRUSTS” that are being declared or announced or revealed by the “DONORS” themselves or with the authority of these Donors such as in an APPEAL made in the public or such Trusts will be developed and structured via the process of legislation. These funds are provided within the broad Charity Objects.
• The assessment of the Restricted Funds involves the analysis of these funds as “Restricted Income Funds” and with the Discretion of the “Members of the Governing Board”, these Restricted Income Funds will be made expandable related to the advancement of certain specific features of the Charity Objects.
• The Restricted Funds may also be graded as “ENDOWMENT” or “CAPITAL Funds and the assets are needed to be rendered or invested or preserved for the sake of factual or real use and are not disbursed.
• The Expenses can be charged to a fund of Restricted kind whilst conducting the “restricted Fund Assessment” in instances only when the Funds will be received or there is true anticipation or a genuine probability of Receipts or Invoices that can then be appropriately accredited to the FUND for meeting the Expense Compliance.
• The Income amount that has been created from Assets and is reserved in a “Restricted Fund” such as INTEREST, is subjected as per the legislations to the similar limitation or restriction as to the Factual or Original FUND except for the cases;
• When the “ENDOWMENT FUND” will serve the purpose of a Restricted Fund and on the Discretion of the “Members of the Governing Board”, the income of such kind of Fund will be expandable.
• If the “Terms and Conditions” of the original or real Restriction is illustrating opposite such as the “Terms related to an Appeal” or the “Manifested Desires of the Donor”.

CATEGORIZATION OF “RESTRICTED FUNDS”:

There are two main categories of the “Restricted Funds”.

1. TEMPORARILY RESTRICTED FUNDS:

• The restrictions related to the Time Limitations may be imposed or asserted by the “Donors”.
• The restriction or limitation of the Time explains that there must be a particular “Campaign” or “Program” to be supported by the “Donation” and it can only be utilized for a peculiar target or goal as well as for a particular period.
• If the allocated time is completed or if the “Project” or the “Campaign” is concluded then there will be turned into either “UNRESTRICTED” or “TERMINATED” form.

2. PERMANENTLY RESTRICTED FUNDS:

• There will be no expiry of “PERMANENTLY RESTRICTED FUNDS”. The description of the way in which these funds are utilized involves the investment being made by the Charity and then subsequent use of the “INVESTMENT RETURNS” and “INTEREST” for an indefinite period.

Irrespective of the kind of “Restricted Fund”, it will be imperative for an organization that works for Charity or a Non-Profit Organization to maintain the record of the Restricted Funds as well as to report these Funds in the “FINANCIAL STATEMENTS” with precision.

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