General Fund and Subaccount Procedures
by Leroy Hughes
Is it legal and/or ethical to deposit money taken in as a "general tithe" to be placed in a subaccount of the church designated for example: Kitchen Fund, even though the money is not designated for that fund. Also, can the Kitchen fund be used to pay other expenses other than designated "kitchen" expenses?
Yes. It is legal and acceptable to transfer funds from the General
fund into any other fund because the funds are not donor-restricted
Be aware that there is a difference between restricted and designated funds.
Designated funds are monies set aside from the general fund for a specific purpose. For example, your governing body could decide to set aside a certain percentage of the general fund for property improvements, these funds become designated funds
Restricted funds are monies given, collected or donated for a specific purpose
The big difference between designated funds and restricted funds is that the governing body can transfer designated funds back into the general funds.
Restricted funds must be used for the purpose in which they were given or raised. For example, a donor gives your church money for a new church sign. Those funds become restricted funds, so you should not take those donor-restricted funds and use it...for example...kitchen expenses.