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Restricted Gifts: What to Do When Strings Are Attached

Brad, the development director of an international environmental charity, was excited to hear that a past supporter was pledging a new, six-figure donation. But there was a catch: the donor wanted to restrict how and where her donation was used.

While Brad welcomed the donation, he knew that restricted gifts come with specific responsibilities. If your nonprofit receives donations with strings attached, it’s important to handle them with care.

Establish Clear Procedures

Donors of restricted gifts expect nonprofits to adhere strictly to the conditions of their contributions. Misuse of restricted funds can lead to legal issues, negative publicity, and loss of trust.

To maintain transparency and accountability:

  • Train staff to identify and properly label restricted gifts.
  • Ensure the appropriate team documents the restrictions and plans for fulfilling them.
  • Regularly review and track expenditures related to restricted funds, using tools like spreadsheets or fund-specific accounts in your general ledger.
  • Implement a reminder system for donor reporting requirements to stay compliant.

Demonstrate Responsible Use

It’s essential to show how funds are being used to meet donor intentions. Proper tracking and reporting can also strengthen your relationship with donors and help secure future contributions.

Encourage Unrestricted Gifts

While restricted gifts can be valuable, they can also complicate your nonprofit’s operations. In cases where fulfilling restrictions is difficult or impossible, it’s often best to politely decline the donation. A one-on-one discussion with the donor can help you explain the situation and explore alternative ways they can support your cause.

To maintain flexibility and ease of operations, encourage donors to contribute unrestricted gifts. With clear communication and trust, many donors will be willing to support your cause without specific conditions.

Reach Out for Help

For more information on managing restricted and unrestricted gifts, reach out to your team at Accavallo & Company LLC. We are available by email at [email protected] or call us at 203-925-9600.

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CHRISTINA IMPERIOLI

Supervisor, CPA

Christina Imperioli is a Supervisor at Accavallo & Company, LLC, where she specializes in the preparation and review of individual and business tax returns across a variety of industries. With a focus on accuracy, client service, and technical expertise, she plays a key role in helping clients navigate complex tax matters.

She began her career as a Staff Accountant at The Innovative CPA Group, quickly rising through the ranks to Senior Accountant and ultimately Supervisor, demonstrating a strong commitment to professional growth and leadership.

Christina is a Certified Public Accountant and an active member of both the Connecticut Society of CPAs (CTCPA) and the American Institute of Certified Public Accountants (AICPA). She holds a Bachelor of Business Administration in Financial Accounting from Western Connecticut State University.

Throughout her career, she has worked with clients in the real estate, construction, and retail sectors, bringing valuable insight and industry-specific knowledge to every engagement.

Outside of work, she enjoys traveling with her husband and son, spending time with her three dogs—two rescues named Cole and Indigo, and a Brussels Griffon named Louie—and exploring local bookstores. Christina is a passionate reader and podcast enthusiast, she often listens to new episodes during her daily commute.

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Sherri Fisher is a Tax Manager at Accavallo & Company, LLC.  Sherri has longstanding expertise in Trust and Estate Taxation, Eldercare, and Estate planning. Sherri appreciates the relationships she has built with estate planning attorneys and advisors, to provide a team approach to assisting her clients. Sherri also has seasoned experience in business and individual taxation and is partial to assisting start-ups in developing overall accounting and operating plans.

Prior to joining Accavallo & Company, LLC, Sherri was a manager in a large firm, servicing high net worth trust clients, business, and personal clients. She was also a Partner in a large bookkeeping firm, which specialized in cloud accounting systems for regional and national companies. Sherri led a team in assisting clients to organize their accounting systems.  She is a graduate of Florida Atlantic University with a B.S. degree in Accounting.    

Sherri’s experience includes working with companies and organizations in a variety of industries including:

  • Investment Trusts

  • DAPT and Family Investment Partnerships

  • Estate and Probate Administration

  • E-Commerce

  • Manufacturing

  • Construction

  • Real Estate Investment

  • Marketing and Service-based industries

In addition to her professional accomplishments, Sherri is an Intuit Advanced Pro Advisor, Intuit Future Firm Advisory Board member, member of the Valley WIN Network, and proudly served as past Connecticut Public School liaison for the Yale Tommy Fund for Childhood Cancer. Sherri enjoys time with her family, Cleveland sports, thrifting and gardening.