Accumulated Fund - Explained
What is an Accumulated Fund in a Non-Profit?
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Table of ContentsWhat is an Accumulated Fund?How is an Accumulated Fund Used?Academic Research for Accumulated Fund
What is an Accumulated Fund?
An association, charity, club, or any non-profit organization can have an accumulated fund. Money goes into the accumulated fun when the non-profit organization has extra income, that is when revenues are higher than expenses. Deficits are also withdrawn from accumulated fund in cases of liabilities, when the revenues are lower compared to the expenditure or expenses.
How is an Accumulated Fund Used?
Oftentimes, non-profit organizations have funds that accumulates money over a specific period of time to serve a particular purpose. Organizations such as charitable associates, clubs and societies set aside money to cater for specific purposes. The accumulated fund might be set aside to buy facilities, equipment, machinery, fixed assets, real estate or even capital assets. Organizations also use accumulated funds to provide liquidity or capital when there are shortages. For example, an organization that normally make charitable donations of $100,00 annually, and has a deficit of $1,000 for a particular year can withdraw $1,000 from its accumulated fun to cover up for the deficiency.