Glossary
Fund Accounting

Unrestricted Fund

By: Alec Hollingsworth
Updated:  
June 2, 2025

DEFINITION:

An unrestricted fund is a pool of resources that a nonprofit can use for any purpose, without donor limitations.
An unrestricted fund is a type of fund within nonprofit accounting that is not subject to donor-imposed stipulations regarding its use. This means that the organization’s board or management has full discretion to allocate these resources toward any purpose in support of the nonprofit’s mission. Unlike restricted funds, which must be used for specific programs or projects dictated by donors, unrestricted funds can cover operational expenses, respond to urgent needs, or be invested in new initiatives. This flexibility makes unrestricted funds crucial for the day-to-day sustainability and growth of nonprofit organizations.

Key Takeaways

  • Unrestricted funds have no donor-imposed restrictions.
  • They provide flexibility for nonprofits to cover any expense.
  • Essential for operational stability and growth.
  • Tracked separately from restricted funds in accounting systems.

Why It Matters

Unrestricted funds provide nonprofits with vital flexibility for covering operational costs and seizing new opportunities.

Real World Example

A community center receives a $50,000 donation from a local business with no restrictions on its use. The nonprofit’s board decides to allocate $20,000 toward staff salaries, $15,000 for building maintenance, and the remaining $15,000 for launching a new after-school program. Because these funds are unrestricted, the community center can adapt the spending as needs arise, such as shifting resources to urgent repairs or expanding services, without needing donor approval. This flexibility allows the organization to remain responsive and sustainable while pursuing its mission.

How Aplos Helps

In Aplos, you can easily track unrestricted funds separately from restricted and temporarily restricted funds. The fund accounting features in Aplos allow users to generate reports that show how unrestricted resources are managed and spent, ensuring transparency and compliance for your organization.
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Frequently Asked Questions

What is an unrestricted fund?

An unrestricted fund is money that a nonprofit can use for any purpose, without limitations set by donors.

How do unrestricted funds differ from restricted funds?

Unrestricted funds can be used for any organizational need, while restricted funds must be spent according to donor instructions.

How does Aplos help track unrestricted funds?

Aplos allows nonprofits to track and report on unrestricted funds separately, ensuring transparency and accurate fund accounting.

Related Terms

Fund
Debit Card
Grant Budget
Management & Discussion Analysis (MD&A)
OMB Circular A‑133
Fiscal Sponsorship

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