Can Boards Restrict Gifts?

No.  Only donors can restrict, and in some instances, unrestrict gifts.

Governing board may designate net assets that do not have restrictions.  And, boards can undesignated net assets they previously designated.

This is an important principle for ministries:  Donors restrict and boards designate. 

Only givers can “restrict” a gift. And, in an accounting sense, gift restrictions are either temporary or permanent. In certain situations, givers have the power to unrestrict gifts, unless funds have already been committed or expended for a project. In the latter case, the funds may not be redirected or refunded.

As an example, perhaps a giver restricts a gift for a certain project. Later, the ministry asks the giver’s permission to redirect the gift for another purpose, unrestricted or restricted, and the giver agrees. The gift is then reclassified, based on the nature of the giver’s redirection.

Conversely, the giver may approach the ministry and request the redirection of a gift previously restricted by the giver. The organization could approve the gift being used for another purpose, based on the giver’s request for redirection, as long as the funds have not already been committed or expended for the original project.

Designations” of unrestricted assets or net assets by a ministry’s governing board do not restrict the use of the funds. Also, board designations may be reversed by the board. For example, unrestricted assets or net assets are not restricted merely because a board designates a portion of them to fund future expenditures for a new building.

Boards can designate unrestricted net assets and can subsequently remove a designation, but boards cannot unrestrict giver-restricted gifts without the consent of the giver because only givers can restrict (or unrestrict) a gift.

For more information on donor restricted gifts, see ECFA’s free ebook:  10 Essentials of Giver-Restricted Gifts to Ministries


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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