Nonprofit Finance Basics: Fund Accounting Essentials

In this episode, your host, Aishat delves into the topic of fund accounting for non-profits, emphasizing the importance of recording income and expenditure by fund.

Using the scenario of a new company receiving income from various sources, Aishat explains the concept of fund accounting and the classifications of funds. She distinguishes between restricted and unrestricted funds, and also discusses designated funds or reserves.

KEY TAKEAWAYS

• Fund accounting treats each source of income as a separate pot of money.
• Restricted funds come with specific requirements and limitations on how the money can be spent, while unrestricted funds have no such restrictions.
• Designated funds or reserves are unrestricted funds set aside for a specific purpose in the future, providing flexibility for non-profit organizations. ...