Can a nonprofit use funds for a specific purpose?

We often see nonprofits set aside money to be used for a particular purpose, and then track those funds as restricted. That is fundamentally incorrect. It is perfectly fine to budget money for a purpose, and even move those funds into a protected account. But restricting the use of funds is not the same as restricted funds .

Can a donor give a restricted contribution to a nonprofit?

Usually, the restriction is either brought up by the donor or by the nonprofit itself. Donors may give unsolicited restricted contributions to nonprofits, but more often, they arise out of ongoing conversations between the donor and the organization.

Is your nonprofit misusing restricted donations?

And, restricted means RESTRICTED! This is not a trivial matter. Donors can take legal action against a nonprofit that it believes is misusing restricted donations. The last thing your charity wants is to be in the cross-hairs of the state Attorney General’s office.