Hello:
In the United States, temporarily or permanently restricted funds must be
used for the designated purpose. This is a function of law which can be
enforced by an Attorney General in your jurisdiction, a written agreement
with the donor or grantor which can be enforced in the the courts and the
ethical obligation to honor what the donor was told they were giving money
for.
If you want to change the use of temporarily or permanently restricted
funds you need to ask for permission to change the use of those funds and
it is good practice to get that change authorization in writing. I have
found that as long as the original donor intent was or is being met with
other funds or funds spent to date, that donors are willing to give you
permission to change the use of the funds including for use on general
operating expenses.
To answer you specific question about the budget surplus, it depends on the
language used to solicit the funds and any written agreements. For
example, some grant and gifts indicate that interest earned must be used
for the designated purpose; therefore, if there is no designation on the
use of interest it can be used for general operating expenses. In other
cases, a donor may designate a gift to sponsor an event. In this case if
the donor gift was $5000 and the expenses of the events were $5000 and you
had attendance revenue of $2000, then the $2000 will be unrestricted as
long as there are no donor stipulations to the contrary.
Garfield Byrd
On Fri, Dec 23, 2011 at 10:23 PM, James Hare <messedrocker(a)gmail.com> wrote:
Hello my fellow fiduciaries,
As the Wikimedia DC treasurer, one of my responsibilities is to
segregate funds so that money intended for a particular activity is
used on that activity. For instance, when the Wikimedia Foundation
graciously awarded us a $5100 grant earlier this year, I made sure to
classify it as a separate asset account so that only items pertaining
to the objective of the grant could be spent with that money. Of
course you all know what the pitfall of earmarked donations is: you're
less capable of prioritizing spending, allocating money where it is
most needed. Charities generally prefer unrestricted gifts for this
reason.
Yet in the course of soliciting organizations for money, you want to
be able to sell them sometimes. "Contribute to Wikimedia DC, and you
will make [Event] possible." If a sponsoring organization is giving
for the sake of
[Event], but you end up running a budget surplus, you will want to
re-allocate that money. (The assumption here is that donations are
governed by contracts that require money to be used toward a specific
function.) I am wondering what the best solution is so that money is
used in as non-restrictive a sense as possible while the donor gets
what they want. I am thinking that in exchange for imposing no
restriction on the gift, the donor receives some kind of perquisite
(such as a banner or poster), but the donor is going to get that
anyway. What are your thoughts?
For the American subscribers to this mailing list, when donors earmark
their donation by simply requesting that it go toward a particular
purpose but otherwise not requiring any sort of contract, to what
extent would we be obligated to honor that request under law?
--
James Hare
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--
Garfield Byrd
Chief of Finance and Administration
Wikimedia Foundation
415.839.6885 ext 6787
415.882.0495 (fax)
www.wikimediafoundation.org