Unrestricted funds are the money and assets a charity can spend on any of its charitable purposes, at the trustees' discretion. They include general funds and any designated funds the trustees have set aside.
General and designated
| Type | Meaning |
|---|---|
| General funds | Freely available for any purpose of the charity |
| Designated funds | Earmarked by the trustees for a particular project or purpose, such as a building repair fund |
A designation is the trustees’ own decision, so they can change or remove it. That is the difference from restricted funds, where the restriction is imposed by the donor and binds the charity.
Reserves
A charity’s reserves are normally its general unrestricted funds that are freely available to spend, leaving out designated funds and money tied up in fixed assets. Trustees should set a reserves policy and explain it in the trustees’ annual report.
In the accounts
The SOFA shows unrestricted funds in their own column, and the notes list any designated funds and what they are for.