Krystal OSRestricted funds are money a donor or funder gave for a specific purpose, program or period, and they can only be spent on that. Unrestricted funds can be spent on whatever the mission needs, including rent and payroll. The distinction is not a preference: it is a legal and accounting obligation, and funders check it at every report.
Why the distinction exists
When a foundation awards $250,000 for a youth workforce program, the money is a promise to run that program. Spending it on something else, even something worthy, breaks the promise and, under nonprofit accounting standards, misstates the organization's finances. Unrestricted money exists precisely so that the lights stay on without touching restricted awards.
The two ways organizations get this wrong
- Overspending a restricted fund, usually by letting program costs drift onto it because it is the biggest balance.
- Underspending a restricted fund, which looks safe but tells the funder the program is not running at the scale they paid for. Underspend is the quieter way to lose a renewal.
How to track restricted funds without a spreadsheet
Three numbers per fund, kept current, are enough for most organizations.
- Awarded: the total in the agreement, with its start and end dates.
- Spent to date: every cost that legitimately belongs to the fund, including staff time allocated to the program.
- Remaining: awarded minus spent, read against how much of the grant period has passed.
Burn rate against the calendar
The useful question is not "how much is left" but "are we where the calendar says we should be." A fund that is 45 percent spent at the 50 percent mark is on pace. One that is 25 percent spent is underspent by half, and the time to notice is now, while there are months left to run the program at full scale.
How Krystal does it
Every grant in Krystal is a fund with an award, spend to date and a remaining balance, and unrestricted money is a fund alongside them. Krystal compares each fund's spend to the grant calendar and labels it on pace or underspent by how much, so the conversation happens in September rather than at closeout.
Can restricted funds pay for overhead?
Only if the agreement includes an indirect cost rate or an overhead line. If it does, that share is restricted money spent as intended. If it does not, overhead comes from unrestricted funds.
What is a temporarily restricted fund?
Money restricted to a purpose or a time period that is released once the condition is met. Most program grants work this way: the restriction lifts as the program spends against it.
Does Krystal replace our accounting software?
No. Krystal tracks restricted funds against grants and programs and connects to QuickBooks, Xero, FreshBooks, Sage and Wave for the bookkeeping itself.