There are essentially two classes of fund: Unrestricted and Restricted.
Unrestricted funds can be applied for any of the charity’s activities. When they are set aside for a specific purpose, they are called Designated. The undesignated funds are called General.
Restricted Funds can be either Income Funds or Endowment Funds. Income funds can be spent in full on the activities defined by the donor. Endowment funds hold capital that can provide an income to be used for the charitable activities.
The Endowment funds are further divided into Permanent Endowments which are held indefinitely or Expendable Endowments in which the capital can be spent at the discretion of the trustees.
The SORP uses this diagram to explain the different types of funds.
