Last month's issue, which focused on accounting for endowments, And for a great overview of how to manage restricted gifts from a fundraising perspective, make sure to check out this month's issue of Fundraising Well. You are receiving this email because you are subscribed to Nonprofit Fiscal Fitness. If you do not wish to receive future issues of Nonprofit Fiscal Fitness, please click here.
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Editor's Note|
Restricted gifts have become increasingly popular with donors who want assurance that their gift will be used as they intend. With restricted gifts, donors have the ability to specify exactly how their funds are to be spent. The donor expects the organization to demonstrate accountability for how those funds are used. Failing to honor such restrictions may expose a nonprofit to erosion of donor confidence and undermine the organization’s credibility — sometimes affecting the nonprofit sector as a whole. The obligations that arise from accepting restricted gifts can be burdensome, and it is important to fully understand the implications of the restrictions before accepting any gift. There are often opportunities to make suggestions to the donor regarding the proposed restrictions that will make the gift much easier for a nonprofit to administer and manage without undermining the donor’s objective. That extra effort at the outset can make it easier and more efficient for a nonprofit to fulfill the restrictions imposed by the donor and can help a nonprofit avoid donor dissatisfaction. Once a decision is made to accept a donor-restricted gift, the nonprofit and its management must be careful to ensure that the funds in question are properly managed on an ongoing basis. For the nonprofit, restricted gifts create administrative responsibilities that can be quite tedious. In rare instances, those responsibilities will become too burdensome, and the nonprofit should decline the gift. Most nonprofits, however, will accept most restricted gifts because they are too important a source of funds to reject. The decision to accept the benefit of restricted gifts carries with it the responsibility of dealing with those gifts properly. But nonprofits that develop and maintain the processes properly will earn the respect and confidence of donors and enhance the reputation of the nonprofit industry. What can you do to ensure that your organization does not have a meltdown amidst the increasing trend of donor restricted gifts? First and foremost, review and update your internal controls. A well-planned internal control system will help ensure restricted gifts are used as the donor intended. Without sufficient accounting controls, you increase the risk of mismanagement, bad publicity, legal trouble, and Internal Revenue Service scrutiny. Start with the following tips.
March 17th, 2005 1:00 p.m. EST
February 22nd, 2005 at 3:00 p.m. EST
March 21st, 2005 at 1:00 p.m. EST You received this email because you are subscribed to Fiscal Fitness. If you would like to unsubscribe, please click here and you will be removed immediately. If this email was forwarded to you, and you would like to receive a free subscription, please visit http://www.blackbaud.com/support/register.asp and log on to our Web site. Once logged on, click the Manage Subscriptions button to choose which Blackbaud publications you'd like to receive. The information contained herein should not be construed as legal or professional advice. If you have questions about how this newsletter's content applies to your organization, you should seek advice from appropriate professional counsel. © 2005 Blackbaud, Inc. All rights reserved.
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Amidst recent large-scale crises and the growing demand for nonprofit accountability, properly managing donor restrictions has never been so important. Nonprofits are often held to higher standards than other entities and are expected to be meticulous financial stewards — especially during times of peak volume. They are expected to remain passionate about delivering on their missions, while ensuring that all restrictions placed on donated funds are met.
Keep restricted funds separate from operating funds and unrestricted funds. 
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