This Accounting Resource Document is currently under revision. If you have any questions, please contact Tom Ewing (688-3113) or Sue Chizmar (292-6856).

Restricted Funds


Table of Contents


Introduction

Restricted funds are dollars given to the university by outside donors or grantors who place specific guidelines on the use of those funds. There are six categories of restricted funds:

  • endowment income and expense
  • current use, commonly referred to as development funds
  • state grants and contracts
  • private grants and contracts
  • federal grants and contracts
  • OSURF restricted.

Policies and guidelines have been established to help departments meet their fiduciary responsibilities to donors and grantors when working with funds in the restricted range.

Reason For The Policy

Restricted funds are given to the university by an outside donor or sponsor who places specific restrictions on the use of the funds. The university has a stewardship obligation to the donor or grantor to use the funds in the manner specified and to be able to report, if necessary, on categories and amounts of expenditures that support the intent of the fund. As a matter of university policy, each restricted gift or contract is assigned its own fund.

Policy Guidelines

Endowment - Income and Expense

Fund Range: 200000-239999

Endowments are funds that a donor has stipulated, as a condition of the gift, must be maintained inviolate and in perpetuity. The gift is invested for the purpose of producing present and future income that is to be expended as the donor stipulates. The donor may also stipulate that income be reinvested. The principal must be maintained intact. The principal is accounted for in the non-current fund range 600000-639999. Income may, according to the donor's stipulations, be unrestricted or restricted as to the purpose for which it is expended, the time it may be expended, or both. Income generated by the principal, and expenditures using the income, is accounted for in fund range 200000-239999.

Quasi-endowments are typically established by the Board of Trustees, rather than the donor, and are retained and managed like an endowment. Principal and income may be utilized at the discretion of the Board. These resources are typically considered unrestricted.

Endowment income may be transferred to endowment principal. Transfers from endowment principal generally are unallowable unless indicated in the Board approved fund description, and approved by the Dean of the college and the University Treasurer.

Development Fund

Fund Range: 300000-399999

Donors provide these funds typically to support a specific activity (e.g., scholarships). The funds are not renewed unless the donor provides additional donations. Stewardship responsibility resides in the department, which ensures that the funds given for a specific purpose are used for their intended purpose. Typically, these funds must not be co-mingled with other funds.

Sometimes a donor will broadly define a current use fund by indicating that it may be used at the discretion of the department. These funds can be used in a variety of ways, as determined by the chairperson, to support the instruction, research or service of the unit.

Discretionary current use funds can be transferred, if necessary, to other restricted funds that are similar in nature. They also can be transferred in order to fund restricted deficits or close out a restricted fund.

Grants and Contracts (non-OSURF)

Fund Ranges:

Private Grants and Contracts: 500000-519999

State Grants and Contracts: 530000-549999

Federal Grants and Contracts: 560000-589999

Private grants and contracts, state grants and contracts (including one-time equipment funds and state appropriations), and federal grants and contracts always meet one or more of the following conditions:

  • There is a written agreement between a sponsor (person, corporation, foundation, and state agency) and the university.
  • There is an agreement that the university will perform certain services in exchange for a specified dollar amount.
  • The university is penalized for nonperformance.
  • The sponsor requires formal financial and/or technical reporting by the recipient as to the actual use of the money.
  • The agreement is enforceable by law and is legally binding.
  • Performance is usually accomplished under time and fund-use constraints.
  • Payment is for the normal cost of the goods or services.

Restricted funds that meet one or more of these criteria should be accounted for as a grant or contract and be used in the manner specified by the granting agency. Generally, funds may not be transferred in or out of these funds.

Some exceptions may apply. A state appropriation with few, if any, restrictions, (e.g., clinical teaching subsidy in the College of Medicine), may be transferred to other funds that are similar in nature and support the intent of the appropriation. In these cases accurate records must be maintained for reporting purposes that indicate where the funds were transferred and how they were used.

A state appropriation that is established with the expectation that other university entities will contribute to or participate in the costs of a particular function can accept transfers from other restricted funds that are similar in nature or discretionary to the department. The intent here is to create one common fund that supports the expenditures associated with the original appropriation.

OSURF Restricted

Grants and contracts administered through the Ohio State University Research Foundation are usually awards from a governmental or quasi-governmental entity or other sponsor who places a series of restrictions that are "characterized by precise programmatic objectives that are to be accomplished within a specific time and budget framework". All financial activity associated with an OSURF fund must be approved by the Research Foundation.


Revised: August 10, 2000