FAR Not-for-Profit · Updated November 2026
Donor Restriction vs Board Designation: Why They Are Not the Same
The key distinction is who imposed the limitation.
Donor restriction
A donor restriction is externally imposed and can limit timing or purpose.
Board designation
A board designation is an internal decision about how unrestricted resources should be used.
Statement effect
Donor restrictions affect net-asset classification; board designations remain without donor restrictions.
Exam strategy
External donor means restriction; internal board means designation.
The takeaway
Donor restrictions are external; board designations are internal.
Related Summit resources
FAQ
Can a board designation create donor-restricted net assets?
No.
Are donor restrictions external?
Yes.
Can boards usually reverse their own designation?
Generally, yes.