The different types of funds are:
- Endowment funds are donations that have been given to a charity, either to be held as capital with no power to convert the funds to income (permanent endowment funds, invested to maintain the value of the capital and to earn income), or where the trustees do have a discretionary power to use the funds as income (expendable endowment funds.
- Restricted funds are funds subject to special trusts specified by the donor. This might be because it was a public appeal for a specific purpose, grants or donations. The trustees will be in breach of trust if they use restricted income other than for the specified purpose. Significant restricted funds have to be separately disclosed in the notes to the accounts
- Unrestricted funds are funds available for the purposes of the charity, to be spent as the trustees see fit. These are split into:
- Designated funds are unrestricted funds that have been earmarked for a particular purpose by the trustees. The notes to the accounts should explain the purpose of designated funds
- General funds are unrestricted funds which have not been earmarked and may be used generally to further the charity’s objects
