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Scholarship Fund

Hello, I am a member of a 503c Non-Profit. A few years ago a scholarship fund was started with the monies coming from donations made specifically for this purpose. Recently, the treasurer of our organization, combined these monies into the funds of the organization. In doing so, they recorded it on our general ledger as sponsorship donations from 2 of the individuals who had donated in the past. This didn't seem correct in my opinion, however I wanted to verify before I proceeded further in questioning the treasurers accounting practices.

Answers

Anonymous
(Director of Finance) |

Because these funds were given for a specific reason/cause, I would think that they would be considered restricted funds (ie available only for that use unless specifically given authorization by the donors) and thus, should be kept segregated in order to maintain a clean audit trail.

Kathleen Deaver
Title: Grants Coordinator
Company: CNY Community Foundation, Inc.
(Grants Coordinator, CNY Community Foundation, Inc.) |

They are most definitely restricted funds. Not only restricted, but for a purpose that is strictly governed by the Pension Protection Act. These funds need to be kept/invested separately, and must have written documentation of how they are invested, the amount of the scholarship(s), the restrictions of applicants, the selection committee and proof of qualifications and independence from the founders of the scholarship.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

How recent? The transfer would have triggered an obvious change in your financials, your external auditors would have picked it up and the Treasurer would have had to justify/document the change/transfer. Is it possible that there have been instructions or permission from the donors? Bottom line, it is all about the intent of the donors.

If not, then the above responses are right. It is restricted funds and should be segregated (accounting/reporting wise) from general funds.

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