[Wade_Rogers_Forum_Moderator]

Hi Caroline….thanks for coming to the Forum! In a Statement of Activities presented in accordance with GAAP, the release of restricted revenues is a reclass from the “With Donor Restrictions” column to the “Without Donor Restrictions” column with no net effect on the bottom line in the “Total” column. That said, it’s an important element of how you’ve paid your expenses (always presented in the “Without Donor Restrictions” column) for the period and is a useful number to include in budgeting as well as internal reporting since it better matches revenues to expenses. On the balance sheet side of things, the release of restrictions will bring down your Net Assets with Donor Restrictions and increase your Net Assets Without Donor Restrictions. Hope this is useful to you. Looking forward to further activity on this discussion!

[Casey]

Hello Caroline. I agree with Wade that releasing a restriction is generally a reclassification rather than a change in total net assets. In simple terms, the amount moves from restricted net assets into the appropriate unrestricted category once the restriction has been satisfied. The organisation’s total net assets do not change simply because of that reclassification. On the statement of financial position, you would therefore see the restricted portion decrease while the unrestricted portion increases. It is essentially a way of showing that those resources are now available for their permitted use.

• This reply was modified 2 weeks, 5 days ago by  Casey.