Unrestricted contribution definition
/What is an Unrestricted Contribution?
An unrestricted contribution is funds or other assets given to a nonprofit entity with no restriction on their use. The nonprofit can then employ the contribution in any way it chooses. These types of contributions are usually directed at the funding of operational expenses, since restricted contributions are usually targeted at other areas of a nonprofit.
Unrestricted Contributions Best Practices
Nonprofit entities prefer to have all contributions be classified as unrestricted, so that the funds can be used to support any aspect of the business. To this end, nonprofits should never include a restriction option on their printed requests for contributions. Also, when significant donors want to apply a restriction to their contributions, a best practice is to push the donors to shorten the restriction period, or to split off a portion of the contribution and classify it as unrestricted.
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Example of an Unrestricted Contribution
Bright Futures is a nonprofit dedicated to supporting underprivileged youth through educational programs, mentorship, and community engagement initiatives. In June 2025, philanthropist Jordan Lee donates $25,000 to Bright Futures without specifying any conditions or designated purposes for the use of the funds. Since the donation comes without any donor-imposed restrictions, it is classified as an unrestricted contribution. This means that Bright Futures can allocate the funds at its discretion to areas where they are most needed.
Bright Futures decides to allocate the $25,000 as follows:
$10,000 towards expanding their after-school tutoring program, allowing them to accommodate 50 more students.
$7,500 to upgrade outdated computer equipment in their learning center, enhancing digital literacy training.
$5,000 to cover operational costs, including utilities and staff salaries, ensuring the organization's smooth functioning.
$2,500 set aside as a contingency fund to address unforeseen expenses or emergencies.
The flexibility of the unrestricted donation enables Bright Futures to address immediate needs, invest in infrastructure, and plan for future uncertainties. This adaptability is crucial for nonprofits to respond effectively to changing circumstances and maximize their impact.