Designated (Donor Restricted) Funds

The church may establish designated funds beyond the General Budget for special purposes. This means that donations can be made for specific purposes or projects (e.g. Building Fund, various FMCiC Giving Streams, etc.). All ministry projects and associated designated funds must be approved by the board and recorded in official minutes. It is important that when a designated fund is established, its purpose or intent be clearly documented.

Once funds are received from a donor designated for a specific approved purpose, the funds in question must be used for that specific purpose only. The key question to be answered by the treasurer or board is “What was in the mind of the donor when the donation was made?”

The designation cannot be changed after the funds are received by action of the board. The exception is when funds are being raised for a specific project that has a budget limit. Funds can be allocated for other purposes in cases where the goal or budget for the project is exceeded and this intent or possibility is clearly communicated when the fundraising is initiated.

Income and expenditures for designated funds must be recorded separately from general funds. The treasurer must know the net balance of all designated funds at all times. The accounting system must be able to carry forward net designated fund balances from one fiscal year to the next.

It is not permissible to temporarily “borrow” designated funds for general operating purposes. If designated funds are kept in the same bank account as general budget funds, the bank balance must always at least equal the amount of designated funds on hand.