Board Designated Funds in a nonprofit are funds that have been set aside for a specific purpose by the organization’s governing board.
These funds are often created when the board decides to allocate a portion of the nonprofit’s unrestricted net assets for a particular use. Board designated funds can be created for a variety of reasons, such as to support a new program or project, to build up a reserve fund, or to cover unexpected expenses.
These funds are separate from donor-restricted funds, which are set aside for a specific purpose by the donor rather than the board.
Board designated funds can vary from organization to organization, but some examples include:
- Emergency Fund: A fund set aside for unexpected events, such as natural disasters, unexpected loss of funding, or a sudden increase in demand for services.
- Capital Improvement Fund: A fund set aside for long-term capital improvements, such as building renovations, technology upgrades, or equipment purchases.
- Program Expansion Fund: A fund set aside for the expansion of current programs or the creation of new programs.
- Staff Development Fund: A fund set aside for the training and development of staff members, such as conferences, workshops, or certifications.
- Endowment Fund: A fund set aside for long-term sustainability of the organization, with the earnings used to support ongoing operations.
- Research and Development Fund: A fund set aside for researching and developing new programs, services or products that may further the nonprofit’s mission.
It’s important to note that board designated funds should align with the organization’s mission and strategic goals and be used in a responsible and transparent manner. Board designated funds can be a useful tool for nonprofit organizations, as they allow the board to prioritize certain initiatives and ensure that funds are available to support them.