What is a restricted fund?
As a non-profit organisation you will no doubt have come across the term ‘restricted funds’. This is nothing new, but how these are dealt with is fundamental to the growth and future of your charitable organisation.
What is a restricted fund?
Often donations are made to a charity that can be used across the organisation for any reason deemed necessary by the charity. However, when a donor gives money to a non-profit organisation they may specify what those funds could be used for, and this is then treated as a restricted fund. It could be, for example, a foundation grant to buy a computer system or an individual donation to purchase a specific asset such as a mini-bus.
If funds are restricted by the donor, then the non-profit organisation is required to ensure these are spent in the correct way, as failure to comply could result in the donor being entitled to get their money back.
It’s therefore imperative that the non-profit organisation can provide up-to-date information on these restricted funds and account for them separately in the financial statements and when budgeting, enabling the correct allocation of funds.
Can technology help me cure the pain of donor reporting?
There are excellent financial and ERP (Enterprise Resource Planning) solutions that can provide this information at the touch of a button. However, some non-profits may still be using excel to manipulate the data outside of any accounting system and thus fall foul of complex calculations, duplication of data and human error, not to mention the time and resource it may take.
At this point you may be asking, how or why do I need Embridge Consulting?
Embridge Consulting, is a leading boutique systems integrator and ERP consultancy with a history of working with non-profit organisations. We’ve been working in the industry since 2009, initially providing services around Unit4 Business Software, but our latest partnership with Xledger, announced in 2021, has enabled us to work with smaller, fast growing non-profit organisations delivering built-in accounting and data analysis tools.
We understand the challenges some non-profit organisations face and we’d like to share how we can help to guide you through the journey of digitally transforming your processes and solutions to help you growth, remain compliant and, above all else, attract new donors.
