That's my understanding as well, Isaac.
"Restricted" in accounting means the usage is constrained by an outside source, so that the organization is not free to use the funds for any purpose beyond that stipulated by the restriction. "Only the donor can restrict" is the shorthand version of this.
However, as Isaac and John both say, that doesn't mean that the organization has to put the gift into the annual fund. One common practice for large unrestricted estate gifts is to put the funds into a quasi-endowment, which functions in the same way as funds restricted by donors to the endowment, but which is not actually restricted, from an accounting/governance perspective.
So while you are free to spend a portion of the funds on a facility project, or to designate a portion of the funds for a facility project, you're not actually "restricting" the funds for a facility project.
My US$0.02 worth; the usual disclaimers apply.
Good luck!
Alan
Alan S. Hejnal
Data Quality Manager
Original Message:
Sent: 12/15/2025 11:56:00 AM
From: Isaac Shalev
Subject: RE: To restrict or not restrict, that is the question
The only legal source of restriction, from an accounting perspective, is the donor. If the donor does not restrict the gift, the funds are unrestricted. Those funds can be internally earmarked or designated, but that's a budgeting issue, not an accounting issue. However, it is not typically the role of an advancement leader to determine how unrestricted money ought to be spent.
Isaac Shalev
Data Strategy Expert
(917) 859-0151
isaac@sage70.comAutocorrect was used in composting this email, please excuse any typos
Original Message:
Sent: 12/15/2025 10:40:00 AM
From: Kelly Hallock
Subject: RE: To restrict or not restrict, that is the question
That's what it sounded like to me but just wanted to double-check.
Thank you!
Kelly
Original Message:
Sent: 12/15/2025 10:37:00 AM
From: John Taylor
Subject: RE: To restrict or not restrict, that is the question
Nowhere does the statement indicate the funds must be "unrestricted," historically meaning the annual fund.
Interestingly, the newer accounting definition of "unrestricted" means the funds aren't limited by donor stipulations and can be used for any lawful purpose of the organization!
The bequest only states you may use the funds in any manner you wish that's mission-related. This means you can do whatever you want with them, including restricting a portion.
John
John H. Taylor, PrincipalJohn H. Taylor Consulting, LLC
2604 Sevier Street
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 12/15/2025 10:18:00 AM
From: Kelly Hallock
Subject: To restrict or not restrict, that is the question
Hi,
We received an estate gift that says "This devise is not conditioned and you may utilize the funds in any way that furthers your mission." Our Advancement VP would like to restrict a portion for a facility project and then keep the rest unrestricted. My accounting office says that this full gift can only be unrestricted, the way it is worded. To me it reads that we may use the gift in any manner we see fit as long as it's appropriate to the mission.
Thoughts? Thank you!
Kelly
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Kelly Hallock
Warren Wilson College
khallock@warren-wilson.edu
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