Alisa Lycheva, Director of Finance and Administration at HealthRight International (https://healthright.org), presented on August 20, 2015 on the topic of "Restricted and Unrestricted Funding for Non-Profits." She spoke to the Nonprofit Executive Directors group (http://bit.ly/nedgroup and http://bit.ly/nedmeet) - on LinkedIn and Meetup.

1. Restricted and Unrestricted
Funding for Non-Profits
Alisa Lycheva,
Director of Finance and Administration
at HealthRight International

2. HealthRight International
HealthRight International builds lasting access
to health for excluded communities, employing
a human rights-based approach and working
closely with community partners to improve
local capacity and advance the inclusivity of
health systems.

3. Unrestricted Funds
• Funds that are free from any restrictions and
are available for general use.
Examples of unrestricted funding include event
revenue, many individual contributions and
unrestricted grants.

4. Temporarily Restricted Funds
These funds have donor imposed restrictions
which can be fulfilled in 2 ways
• Passage of time (time restriction)
• Performing defined activities (purpose
restriction)
Examples include grants or individual
contributions that are given for specific project
or campaign.

5. Permanently Restricted Funding
Funds that are restricted by the donor for a
designated purpose or time restriction that will
never expire.
The intent is that principle balance of the
contribution will remain as an investment and
the organization will utilize the interest and
investments return. Such as endowment.

6. Restricted Funding (Cont.)
Restrictions can placed on funds by the donors
and are defined in “gift instrument” such as
grant award letter.

7. Accounting Requirements
Two principles are at the core of accounting
requirements for restricted funding
• Restrictions are imposed by the donor when
the gift is made
• Income must be recognized in a year when
unconditional commitment is received
regardless of when expenses occur

8. Management Challenges
• Tracking and Recording requirements
• Do not budget to spend unavailable funds
• Educate staff and Board about restrictions
• Analyzing reports pay close attention to
unrestricted funds
• Understand how restrictions will affect cash
flow

9. Management Challenges
• Understand restrictions, know when they are
satisfied and how to release assets from
restrictions
• Develop simple and reliable way to track
restrictions

10. Concerns with Restricted Funds
• When researching and applying for grants
beware of challenges that potential
restrictions could present
• Fundraising letters can inadvertly place
restrictions on funds. Be certain that donors
and managers understand the purpose of
contributed dollars and if restrictions are
present

11. Concerns with Restricted Funds
• Work with staff to understand true costs of
programming. Allocate all direct costs
associated with a program. These allocations
help to prepare more accurate budgets for
grants and appeals, and better utilize
contributions restricted to specific
programming.