Donations can be Restricted or Unrestricted

Many people get confused when non-profit agencies start talking jargon about their funds. Two common terms used in the non-profit world are “restricted” and “unrestricted.”

According to Foundation Groups website, “Restricted funds are monies set aside for a particular purpose as a result of designated giving. They are permanently restricted to that purpose and cannot be used for other expenses of the nonprofit. By contrast, unrestricted funds may be used for any legal purpose appropriate to the organization.”

So let me break that down for you in the world of United Way of Wayne and Holmes…

We have thousands of donors. Thank you if you are one of them, by the way!

When you donate, you have the option to designate your gift to a particular passion or program. For example, you may want to sponsor a child who is enrolled in Dolly Parton’s Imagination Library. As soon as we receive your donation it is “restricted” and can only be used for that purpose.

A few examples of restricted funds here at United Way of Wayne and Holmes include:

• Donations for the Severe Weather Shelter.
• Donations for Youth Development.
• Donations for Reading Under the Lights. 
• Donations for another organization.

In the 2022 fundraising campaign donors contributed $322,566.00 in restricted funds. Donations are not the only restricted funds; we also have endowments that have been set up for our organization and the use of those endowment funds also have restrictions on them.

On the other hand, if you donate and do not choose a passion or program your donation is “unrestricted” and will be used for anything – legal thing – that we need to run the organization.

With unrestricted funds we can meet needs in the community as they happen. Unrestricted funds also help us do our job. In 2022, we were able to give away an additional $913,496.00 in unrestricted funds to our partner agencies.

Most organizations prefer unrestricted donations from individuals, as this provides more options to help people and most grants already restrict the organization to a particular purpose.

If you have any questions about restricted vs. unrestricted donations, please feel free to comment or give me a ring at 330-264-5576.