What is a Donor-Imposed Restriction?

A donor-imposed restriction is a limitation on how a contributed asset can be used. This restriction can address the purpose to which an asset is put, the time period during which it can be used, or both. A restriction may be permanent, or limited to a specific period of time or an event, after which the restriction is lifted.

Explicit and Implicit Donor-Imposed Restrictions

An explicit donor-imposed restriction is a restriction that has either been directly communicated to the recipient or conveyed in writing. An implicit donor-imposed restriction is derived from the manner in which a contribution is solicited from the donor. For example, if you contact a potential donor about giving money for the construction of a new museum exhibit, then it is implied that any resulting donations will be spent on that exhibit.

Example of a Donor-Imposed Restriction

For example, a donor contributes a delivery van to a nonprofit organization, and imposes a restriction that it can only be used to ferry disabled people to the grocery store for the next five years, after which it may be sold. This is an example of both a usage restriction and a time restriction.