Restricted fund is a pool of money reserved for use in selected specific purposes. Such funds may be permanently or temporarily restricted and are based as principal amounts which can earn interests. The interests earned can be spent by the respective organizations. An example of a restricted fund is the strike fund. Strike funds are established by unions and organizations before hand to provide financial payments to striking workers during strikes or in events related to strike. Different policies and regulations apply to the usage of strike funds depending on the organization in question, (McMillan, 2003).
A non-profit making organization which has set aside money for safety purposes may rescind such a decision and decide to use the reserved money for general operations. This can be done through amendment or formulation of rules, regulations and procedures that may explicitly allow for such action to be undertaken. Depending on the organization, consent from major stakeholders may be required to divert the money into other uses, (McMillan, 2003).
The case for a union is a different one. Union members usually contribute to the strike fund and in existing laws; such reserves may be considered as donor-restricted funds. In different unions, there may be legal setups that restrict usage of money placed in strike funds. In these instances, many unions would only use the funds to cover for workers involved in legally authorized strikes in line with their constitution and laws regulating the use of a strike fund. This is also in relation to fund accounting which dictates that funds apportioned for a particular purposed should be used and accounted only for that specific purpose, (Thieblot & Cowin, 1972)
In conclusion, it matters as to whether the funds are for steel workers’ union as in their case; the funds are regarded as strictly restricted funds and hence should only be used for a particular purpose they are set for. For a not-for-profit organization, using the fund for safety purposes, the board can overturn any restrictions put on the fund and apply them in the organization’s general operations.
References
McMillan, E. J. (2003). Model policies and procedures for not-for-profit organizations. Hoboken, NJ: John Wiley.
Thieblot, A. J., & Cowin, R. M. (1972).Welfare and strikes: the use of public funds to support strikers. Philadelphia: Industrial Research Unit, Wharton School of Finance and Commerce, the University of Pennsylvania.
