62 VOCABUARY

Question 1

Donor-Imposed Restriction

Answer 1

A donor-imposed restriction is a donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following:

The nature of the not-for-profit entity (NFP)
The environment in which it operates
The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association
Some donors impose restrictions that are temporary in nature; for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.

FASB ASC Glossary

Question 2

Net Assets with Donor Restrictions

Answer 2

Net assets with donor restrictions are the part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions. (Donors include other types of contributors, including makers of certain grants.)

FASB ASC Glossary

Question 3

Net Assets Without Donor Restrictions

Net Assets Without Donor Restrictions

Answer 3

Net assets without donor restrictions are the part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions. (Donors include other types of contributors, including makers of certain grants.)

FASB ASC Glossary

Question 4

Not-for-Profit Entity

Answer 4

According to the FASB ASC Glossary, a not-for-profit entity is distinguished from a business entity by three characteristics: contribution of significant resources from providers who do not expect proportionate return, operating purposes other than to provide goods or services for profit, and absence of ownership interests like business enterprises. In addition, the IRS stipulates that no part of the organization’s net earnings can inure for the benefit of any specific person or persons.

FASB ASC Glossary

IRS Form 1023

AICPA Audit and Accounting Guide Not-for-Profit Entities, Section 15.09