Fund Balance

Fund balance is an accounting term used by nonprofit organizations to describe the net assets available after subtracting liabilities from assets within a specific fund. It represents the difference between what a fund owns and owes, indicating the resources available for future use or specific purposes. Fund balances are generally categorized as restricted, temporarily restricted, or unrestricted, depending on donor stipulations and organizational policies. This classification helps organizations manage resources responsibly and ensures compliance with legal and donor requirements. Accurately tracking fund balances allows nonprofits to demonstrate accountability, plan for long-term sustainability, and report transparently to stakeholders, including donors, boards, and regulatory agencies.