Hi guys, I need your help. I am having a hard time identify the difference between unrestricted, temp, and perm restricted funds. I know it may sound stupid. I feel that I know the meaning but when it applies to questions,I always got the wrong answers. I know if it is internal restricted then it is unrestricted. however, if donor restricted, it should be Temp?

Is there a much clearer explaination?

For example, say the donor restrict the fund to be used for cancer research only. Then it is Temp or Perm?

Thanks!!! want to get a better idea. exam is tomorrow!!  

If it is permanantly restricted it could be something like the donor saying, "I will give you this cash, but you have to invest it, and you can only use the proceeds (i.e. dividends, interest) for scholarships, the principal must always stay invested." No matter what, the original donation has to be invested.

Temporarily restricted would be the donor saying, "Heres some cash, but you can only use it to build a new football stadium."  The cash is restricted UNTIL they purchase the land for construction of the stadium, commence construction, whatever.  So in this case the cash is restricted, however, only until the condition is satisfied, which makes it temporary.

Does that help?

Hey 2010,

Permanent is when say, a donor gives $500,000 in stocks with the stipulation that the stocks can never be sold but any dividends can be used for whatever the entity needs.  The $500,000 is perm restricted as it can never be used for anything other then what the doner specified.

Temporary - say a donor contributed $25,000 for the purpose of building a storage building.  The amount is temporarly restricted untill the entity uses the funds to build the building which would then move the funds to unrestricted.

Unrestricted is available for the entitiy to use in whatever manner they see fit.

Hope that helps and good luck on your exam!

Edit: Candadian and I must have been posting at the same time!

I can only hope thats the case, 75 works too!