Donor restrictions are conditions placed by donors on their contributions to a nonprofit organization that dictate how the funds should be used. These restrictions can vary widely depending on the donor’s intent and the nonprofit’s mission. Here are some examples of donor restrictions:
- Purpose restriction: Donors may restrict their contributions to a specific purpose or program within the nonprofit organization, such as funding for a particular project or research initiative.
- Time restriction: Donors may restrict the use of their contributions for a certain period of time. For example, a donor may restrict their contribution to be used only in the current fiscal year.
- Geographic restriction: Donors may restrict the use of their contributions to a specific geographic region or community, such as funding for a local food bank or homeless shelter.
- Matching gift restriction: Donors may require that their contributions be matched by other donors before the funds can be used. This is common in corporate matching gift programs.
- Endowment restriction: Donors may establish an endowment that restricts the use of their contribution to generating investment earnings to support a specific program or purpose.
- Capital campaign restriction: Donors may restrict their contributions to a capital campaign for a specific project, such as a new building or facility.
- Scholarship restriction: Donors may restrict their contributions to support scholarships for students who meet specific criteria, such as academic merit or financial need.
It’s important for nonprofit organizations to carefully track and report on donor restrictions to ensure that they are using the funds in compliance with donor requirements. Nonprofits should also communicate clearly with donors about the potential impact of their restrictions and any administrative or financial reporting requirements associated with their contributions.