Restriction Auto-Classifier for Nonprofit Gifts

The problem

Restricted gifts go wrong at the first step. A staff member enters a gift and picks the restriction by hand. One wrong guess spreads. It hits the fund balance, the board report, and the audit. The error is cheap to fix now. It is costly to find later.

How GrantPipe solves it

GrantPipe suggests the net-asset class as you enter the gift. It reads what you already set up. That means the fund you linked, any grant you linked, the restriction term, and the donor’s written designation. Then it prefills the restriction and shows a short reason. For example: “Suggested: Temporarily restricted, because the linked fund is temporarily restricted.”

You stay in control. Accept the suggestion with one click. Or change the restriction yourself. A manual change always wins.

TL;DR

• Suggests the net-asset class on every gift at entry
• Reads the linked fund, linked grant, existing term, and donor designation
• Shows the reason and a confidence level for each suggestion
• Prefills the restriction but lets staff override in one click
• Links or creates the restriction term when you accept a restricted gift
• Uses fixed rules, not AI guessing, so the logic is clear and testable
• Does not replace CPA judgment on net-asset classification

How it works

1. Link a fund or grant, or type the donor’s designation on the gift
2. GrantPipe reads those signals and suggests a net-asset class
3. A banner shows the suggestion, the reason, and a confidence level
4. Accept the suggestion or change the restriction by hand
5. When you accept a restricted gift on a fund, the restriction term and release schedule are linked or created for you

Who it’s for

Gift-entry staff who should not have to be fund-accounting experts. Finance leads who inherit whatever class was picked at entry. Executive directors who want the board balance to match the audit balance.

Why GrantPipe built it this way

The classifier uses fixed rules in a clear order, not a model that guesses on your data. Every suggestion comes with the reason behind it, so a reviewer can check the logic. The rules read your real setup: fund types, restriction terms, and grant links. Better setup means better suggestions. This is a guardrail for clean data, not accounting advice, and it never overrides a person’s choice.

What it replaces

• The hand guess on restriction at every gift entry
• The wrong class that quietly flows into fund balances and board reports
• The audit finding on a misclassified net-asset release
• The cleanup project to reclassify a year of gifts after the fact

This feature builds on Restricted Fund Tracking. The classifier picks the class at entry; restricted fund tracking owns the term, balance, releases, and evidence after that. It also works alongside Grant Pipeline Management, where the fund and grant links on a gift originate.

The classification rules in order

The classifier reads signals in a fixed priority order. You can read the same rules and predict the output before you enter a gift.

1. Existing restriction term. If the linked fund or grant already has a restriction term with a net-asset type, that type wins. The term was set deliberately and the classifier respects it.
2. Fund net-asset type. If no term exists, the classifier reads the fund’s net-asset type directly. A permanently restricted fund produces a permanently restricted suggestion.
3. Linked grant. If no fund type is set, a linked grant moves the suggestion to temporarily restricted. Grant funds are donor-restricted by default until the award terms are spent.
4. Donor designation keywords. If nothing above applies, the classifier scans the donor’s written designation for words like endowment, in perpetuity, restricted to, or named fund. A match produces a restricted suggestion with a low confidence flag.
5. No signal. If none of the above apply, the suggestion is unrestricted. Staff can still set a restriction by hand.

Each step is transparent. The suggestion banner names the rule that fired so a reviewer can check the logic without opening a separate screen.

What good fund setup looks like

The classifier is only as good as the fund and restriction term data you maintain. A fund with a net-asset type set gives better suggestions than one left blank. Restriction terms on recurring grants remove the need for keyword matching entirely.

GrantPipe surfaces setup gaps as warnings during gift entry. If a fund has no net-asset type and no restriction term, the classifier will tell you that and suggest unrestricted rather than guess. That warning is an invitation to fix the fund record, not a blocker.

How finance leads use the audit trail

Every accepted suggestion is recorded with the rule that fired, the confidence level, and the timestamp. Finance leads can pull a list of gifts where the suggestion was overridden, which surfaces patterns worth reviewing. A gift-entry staff member who overrides the suggestion is not doing anything wrong, but a pattern of overrides on one fund type often points to a fund record that needs updating.

Common questions from finance leads

Finance leads sometimes ask whether the classifier stores a log of every suggestion or only the accepted ones. GrantPipe records both: the suggestion and whether it was accepted or overridden. That log is available on the gift record and in the activity log. It does not appear in donor-facing communications.

Finance leads also ask what happens when a fund changes its net-asset type after gifts have been entered. Old gifts keep their existing restriction. The classifier only runs at entry. Retroactive reclassification is a separate process that goes through the restriction lifecycle and requires a deliberate journal entry, not an automatic update.

Start a free trial

Start a trial.

Related feature pages

• Restricted fund tracking
• Grant pipeline management
• Product overview
• Pricing and plan fit