Restricted gifts to not-for-profit organizations

Question

Quizplus · Accepted Answer

Restricted gifts are donations made to not-for-profit organizations for a specific purpose or program. These gifts cannot be used for other purposes unless the donor who made the restriction has approved it. Therefore, when a not-for-profit organization receives a restricted gift, it must initially record it as an increase in restricted net assets. However, if the restriction is met in the same period, then the organization may choose to release the restriction and show the gift as an increase in unrestricted net assets. This is because the organization has fulfilled the donor's intention for their gift, and the restrictions are no longer applicable. The decision to release the restriction and show the gift as an increase in unrestricted net assets is at the discretion of the organization's management.

Restricted Gifts to Not-For-Profit Organizations