FAR NFP · Updated November 2026
NFP Net Assets: With or Without Donor Restrictions?
Ask who imposed the restriction: the donor or the organization itself.
With donor restrictions
A donor can restrict resources for a purpose, future period, or other qualifying limitation.
Without donor restrictions
Resources not subject to donor-imposed restrictions belong in net assets without donor restrictions.
Board designation
An internal board designation does not create donor-restricted net assets because the donor did not impose the constraint.
Release from restriction
When the organization satisfies the donor restriction, amounts can be reclassified to net assets without donor restrictions.
The takeaway
External donor limitation creates donor restriction. Internal preference does not.
Related Summit guides
FAQ
Is a board-designated reserve donor-restricted?
No.
Can a time restriction expire?
Yes.
Is a restricted contribution necessarily conditional?
No. Conditions and restrictions are separate.