The world of nonprofit accounting becomes more complex when a donor makes a donation with certain strings attached. This type of donation is called a restricted donation. Restricted donations are one of the most difficult concepts in nonprofit accounting since segregating, or earmarking, these restricted funds from unrestricted funds is a necessary accounting step to comply with these donor imposed restrictions. So with that in mind, I will clarify the difference between a restricted donation and an unrestricted donation.

Permanently restricted - Permanently restricted is a donor-imposed restriction that states that the donation must be maintained permanently, with the organization using all or part of the income derived from the asset. An example of a permanently restricted donation would be when the organization receives an endowment gift where the principal cannot be spent, but the earnings may be spent.

Temporarily restricted - Temporarily restricted is a donor-imposed restriction that most commonly restricts the use of funds for a specific purpose. For example, the restriction could be to use the funds for a particular program or to buy a certain piece of equipment. When such a restriction is imposed, the funds remain restricted until the restriction is satisfied.

Unrestricted - If the donor doesn't impose any restriction on the funds they are giving, then the donation would be considered unrestricted. An example of an unrestricted donation would be when a donor does not specify how they want their donation to be used.

Please contact anyone in the not-for-profit team at Winter, Kloman, Moter & Repp, S.C. if you have any questions or need clarification on when a donation is restricted versus unrestricted.

 WKMR Not-For-Profit Services

At Winter, Kloman, Moter & Repp S.C., our not-for-profit team provides quality audit, accounting, tax, and consulting services to a variety of not-for-profit agencies, government funded businesses, private foundations, and assorted charitable organizations. Our experienced team has helped many not-for-profit organizations throughout Southeastern Wisconsin grow and thrive including:

• Human Service Agencies
• Cultural & Arts Organizations
• Charitable & Religious Organizations
• Educational & Day Care Institutions
• Professional & Trade Associations
• Assisted Living Facilities
• HUD/WHEDA Housing Projects
• Government-funded For-Profit Businesses

 We concentrate on helping you best manage public or donated funds, analyzing how to get the most from your resources and helping you implement your plans to stretch every dollar. Our team of professionals understands your complex financial reporting needs, and will help you to accurately report your finances in an understandable way. We provide the independent Audit and accounting services required by many of your funding sources by taking a value-added approach, implementing ever-changing tax reporting requirements, providing information technology consulting, and working with every aspect of your organization.

We provide more than just traditional accounting services, implementing ever-changing tax reporting requirements, providing information technology consulting, and working with every aspect of your organization to support your success.