How to Implement "Release from Restrictions" in Grants Management ?

Summary:

A release from restriction is when donor-restricted funds are made available for general use after meeting specific donor conditions or timeframes.

Following is an Example - A children’s charity receives a $25,000 grant from a foundation to purchase new playground equipment, with the restriction that funds must be used by the end of the year. The charity tracks the grant in a restricted fund. Once they purchase the equipment in November, the restriction is considered met. The charity then records a release from restriction, moving the $25,000 from restricted net assets to unrestricted net assets in their financial statements. This accurately reflects that the funds were used according to the donor’s intent and are no longer considered restricted.