Gift Recording isn't part of my portfolio these days, but I've worked through that very issue with a number of previous organizations.
As Isaac noted, many current-year expendable gifts that underwrite an existing budget item or that have only what accounting standards call "restrictions of a general nature" would not be truly restricted, in the accounting sense. Fundraising standards might well consider them restricted, however, and we tended to call these types of gifts "Unrestricted, Designated."
For truly restricted gifts according to accounting standards, i.e. gifts for purposes for which we would not otherwise spend money, what we essentially did was to collaborate with our colleagues in Finance to set up a criteria for creating a new restricted fund on the ledger. That was a bit of an art as well as a science, but the main criteria were that Finance would set up a restricted fund to support a fund-raising initiative of our organization, and otherwise that Finance would set up a restricted fund based on the expected threshold of gifts (sometimes met by one gift; this was $5K at one liberal arts college, if I recall correctly) or the expectation that there would be an ongoing stream of gifts in future years at a certain level.
For accounting-restricted gifts that did not rise to the standard for the creation of a fund on the ledger, we could usually identify a somewhat broader restricted fund in the same area. For example, there might not be a Math Library Journal of Approximation Theory Subscription Fund, but there might be a Department of Mathematics Fund. We would set up a new "allocation" in the fundraising system that would also point to that more general accounting fund. On the general ledger, the money was in the existing broader fund, but we could use the allocation in the fundraising system to keep track of the more specific purposes using the allocation, as a sort of sub-ledger. Then, once a month, we would run a report of all those designations and send them to the Finance Office and the respective units (e.g. the Department of Mathematics) so that everyone knew the more specific purposes of some of the funds in those accounts, so that the departments could spend them according to the intended purposes.
We actually did something similar for Unrestricted, Designated Funds. Finance had a general unrestricted Annual Fund fund, but, one year, we might decide to feature support of several activities in our annual fund messaging. For example, we might feature underwriting faculty salaries. From an accounting perspective, that was a restriction of a general nature (the school was going to spend money on faculty salaries in any case, and we were never going to raise more for faculty salaries than the institution was otherwise going to fund out of general revenue). So we set up an allocation in the fundraising system for Annual Fund/Faculty Salaries and linked it to the on Annual Fund fund on the general ledger. We could use that allocation to record gifts designated for faculty salaries, correspond to donors appropriately, evaluate the success of our various featured solicitations, etc., but from a Finance perspective, it was all just Annual Fund.
My US$0.02 worth; the usual disclaimers apply.
Good luck!
Alan
Alan S. Hejnal (he/him)
Data Quality Manager
