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Which Gifts Are Donor Restricted?

Identifying Them is Challenge #1
Dan Busby | posted 11/07/2007
This article provided by the Engstrom Institute

When a church or other charity receives funds, it is essential that any donor-restricted gifts be identified, properly receipted, and segregated in the accounting records, with related documentation retained for accounting and auditing purposes. It sounds easy, but it can be so complex!

Evangelical Council for Financial Accountability (ECFA) receives more questions about donor-restricted gifts than on any other topic. This is why Donor-Restricted Gifts has been published by ECFA and why a series of articles is being written to highlight various facets of this topic. This first article in this series focuses on the identification of donor-restricted gifts.

Unless a charity properly identifies donor-restricted gifts, the accounting for and the accountability of these funds will not be properly handled.

• Accounting. A gift that is not donor-restricted may be recorded in the accounting records and in the audited financial statements as unrestricted. However, recording a donor-restricted gift must be consistent with the restrictions as either temporarily or permanently restricted. (There are certain exceptions for reporting donor-restricted gifts as unrestricted activity on the financial statements—this topic is covered in other articles that can be found at www.efca.org.)

See also:

 charitable gifts, donor restricted gifts, Financial management, nonprofits