Simple Board Designated Net Assets

Under current standards board-designated net assets may be earmarked for future programs investment or other uses.

Board designated net assets. Not a feature affected by ASU 2016-14 but. In addition to these new categories the standard adds disclosure requirements for board-designated net assets and for underwater endowment funds. Board Designated Funds.

If this is a for-profit entity the restriction is monetary. Board-designated restriction definition An action by a nonprofit organizations board of directors to earmark an asset for a specified purpose. Assets designated by the Board of Directors similarly may be classified as long term but should not be confused with donor.

Some governing boards may delegate designation decisions to internal management. These internally designated funds should be classified as net assets without donor restrictions and reported separately from externally restricted funds ie funds restricted by a donor either on the face of the financial. This remains true with the implementation of ASU 2016-14.

Board-designated net assets are unrestricted net assets that are subject to self-imposed limits by action of the governing board eg future programs investments operating or capital reserves quasi-endowments contingencies purchases construction of fixed assets or other uses. Some governing boards may delegate designation decisions to internal management. NFP Boards often earmark net assets for future programs investments contingencies purchaseconstruction of fixed assets or other uses.

Such designations are considered to be included in board-designated net assets. A board-designated restriction is a restriction on the use of an asset that is imposed by the board of directors. Additionally this ASU allows governing boards to delegate designation decisions to internal management with those designations also included in board-designated net assets.

Common purposes for the board-designated net assets are capital projects operating reserve liquidity reserve quasi-endowments contingency funds specific programs and future projects. This information will highlight to the user of the financial statements the board decision on the use of net assets without donor restrictions. Board-designated net assets may be earmarked for future programs investments contingencies purchase or construction of fixed assets or other uses.