What are Unrestricted Net Assets?

Unrestricted net assets are assets contributed by donors to a nonprofit entity that have no restrictions placed on their use. This is the most sought-after type of asset, since it can be used for administrative and fundraising activities. The typical nonprofit entity structures its fund raising activities to encourage donors to make unrestricted asset donations.

Examples of Unrestricted Net Assets

Here are three examples of unrestricted net assets:

American Red Cross – General Disaster Relief Fund. The American Red Cross receives donations for specific disaster relief efforts (restricted funds), but it also collects unrestricted donations for general disaster response. These unrestricted funds allow the organization to quickly allocate resources to areas with urgent needs, such as deploying volunteers, purchasing emergency supplies, or covering operational costs.
Smithsonian Institution – Unrestricted Endowment Funds. The Smithsonian Institution, which operates museums and research programs, has an endowment fund that includes unrestricted net assets. These funds come from past donations and investment returns that are not tied to specific exhibits or research projects, allowing leadership to use them for institutional priorities, including maintenance, new educational programs, or administrative expenses.
United Way – Annual Giving Campaign. United Way runs an annual giving campaign where many corporate and individual donors contribute funds without specifying a designated purpose. These unrestricted funds enable United Way to distribute resources flexibly among various community programs, such as education, financial stability initiatives, and emergency assistance, based on current needs.