types of charitable giving
- unrestricted - this is when you give money to the nonprofit and you let them decide how to use it. They can spend it on any expense sending newsletters, paying health insurance for their employees, programming or anything they see fit. Some donors can get upset when they think their money is giong to be spent on the electric bill over providing services, but nonprofits are like any other business they all have expenses.
- temporarily restricted - this means that you give a gift to a nonprofit and they are not allowed to spend your money until they have fulfilled something. For instance, if you give to a scholarship fund at a school, the school may only spend that money on the schloarship program, they can not use it to pay a teacher's salary. Once they have completed the terms of the gift (given the scholarship), they can release the money from restriction.
- permanently restricted - you will see this at colleges, schools, and museums a lot. This is a gift that is permanently restricted and can almost never be released for use. commonly, these are endowments. a donor may give a permenantly restricted gift of $100,000 to the endowment at her university. the university will invest that money and will hopefully gain interest on the money. if the interest was 5% one year, the university would have $5,000 in interest. the university can only spend the $5,000 of interest that they make off of investing her $100,000. The $100,000 stays in the endowment and continues to make interest each year.
- in-kind - typically donations that are not cash or stock. Some common in-kind donations are clothes, cars, food, use of space for an event, or expert professional services that are donated (different than volunteering).
