How Booster Clubs Handle Restricted Funds in Monthly Reports

A parent donates $2,000 in memory of their late child, specifying it go toward the swim team scholarship fund. A local business sponsors the football program with $1,500, specifying it be used for equipment only. Your booster club receives a small grant for a summer skills clinic. Each of these is a restricted fund — money with strings attached — and each one needs to be tracked separately from your general operating account.

What makes a fund "restricted"?

A fund is restricted when the donor or grantor has specified how it can be used. "For equipment only," "for scholarships," "for the women's volleyball program" — any designation that limits how the money can be spent makes it restricted. Unrestricted donations, by contrast, can be used for any organizational purpose.

It's important not to mix restricted funds with your general operating account in your financial records. If a grant for equipment gets deposited into the general account and $500 of it gets used for travel before the equipment is purchased, you've potentially violated the grant terms — even if the travel was a legitimate organizational expense.

How to show restricted funds in your monthly report

Add a separate section to your monthly report for each significant restricted fund. Show: the fund name, the purpose, the opening balance, any additions (contributions received), any expenditures (spending against the restriction), and the closing balance. This section runs alongside your general income and expense report — it's not part of the operating account total.

For example: "Scholarship Fund — Balance as of October 31: $2,400. No activity this month."

Spending restricted funds

Before spending from a restricted fund, confirm that the purchase fits the restriction. Document the connection between the expense and the fund's purpose — this is especially important for grants, which may require reporting to the grantor.

When you spend restricted funds, record the expense against the restricted fund (not your general operating account) and keep the receipt with a note on which restriction it satisfies.

When restricted funds accumulate over time

Restricted funds that accumulate over many years can create complications. If a restricted fund grows large without a clear path to spend it in accordance with the restriction, raise it with the board. In some cases, the original donor may need to be contacted to clarify or modify the restriction. In cases where the restriction can no longer be fulfilled (a program has ended, for example), consult a nonprofit attorney about the appropriate disposition of the funds.

For co-op schools managing grant-restricted funds, the tuition and grant income guide covers how grants should appear in the income section. For the broader question of managing multiple income streams, the multiple income sources guide applies here too.

Common questions

Should restricted funds be in a separate bank account?

Not necessarily, but it helps. A separate account makes the tracking automatic — the bank statement is the restricted fund record. If the amounts are small, a separate internal ledger line within your general account is usually sufficient. For large or legally sensitive restricted funds (significant grants, estate donations), a separate account is worth the administrative overhead.

What if a restricted fund has been spent on the wrong thing in the past?

Document what you find, bring it to the board, and if the amounts are significant, consult a nonprofit attorney about how to correct the record. This is a situation where transparency — even about historical errors — is better than hoping no one notices.

EasyTreasurer generates clean categorical reports from your bank CSV — giving you the foundation to track restricted and unrestricted funds side by side in your monthly board reports.