Restricted Funds Release Calculator
TLDR
Release-from-restriction is the accounting event that moves restricted funds to unrestricted net assets - but only when the donor's conditions have been satisfied and documented. This worksheet helps finance staff calculate the releasable amount, identify the required documentation, and prepare the journal entry reference for each restricted fund.
What This Calculator Does
The restricted funds release calculator provides a working document for determining when and by how much a restricted fund can be released to unrestricted net assets. It is designed for use at month-end close and at year-end audit preparation.
The calculator does three things: identifies which funds are eligible for release in the current period, calculates the releasable amount based on qualifying expenditures, and documents the release event for the accounting records and audit file.
ASC 958 Release-from-Restriction Rules
Before using the calculator, understand the three-part rule that governs when restrictions are released.
Purpose restrictions are released when the organization incurs qualifying expenditures for the specified purpose. The release amount equals the expenditures that satisfy the restriction - not the total fund balance, and not a lump sum at year-end, but the amount corresponding to each batch of qualifying expenses as they are incurred.
Time restrictions are released when the required time condition is met: when a pledge installment becomes due, when a specified date arrives, or when a specified event occurs. The release amount equals the amount of the restriction that is now freed from the time condition.
Perpetual restrictions on principal are never released. Investment income generated from permanently restricted endowment principal is released according to the organization’s spending policy and the donor’s stated purpose for the income.
A common error is releasing the full fund balance at year-end regardless of when conditions were satisfied. The correct approach is to release as qualifying expenses are incurred - monthly, if the fund is active and expenses are posting regularly.
Restricted Funds Release Calculator
A worksheet for calculating when and how restrictions are released: fund name, restriction type, release conditions, eligible expenses to date, amount releasable, documentation required, and journal entry reference - with ASC 958 release-from-restriction guidance. Delivered by email.
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