Types of Property Owned by Non-Profit Corporations
In any proceeding involving the property of a non-profit corporation, it may become necessary to distinguish among various categories of ownership. Since non-profit corporations can act pursuant to 15 Pa.C.S. §5547(a) as trustees for themselves, some non-profit corporations have express trust funds held for their own benefit. More commonly, non-profit corporations hold funds that are subject to a variety of donor-imposed restrictions. These restrictions are usually related to the use of the property for a particular purpose, or the use of only the income2 from the property. Categories of such funds (which may or may not be subject to specific use restrictions) include: (i) those funds given by donors for the “endowment” of the corporation; (ii) board restricted funds; (iii) and the other general assets of the corporation. The rights and obligations of the corporation and the donors with respect to these funds often depend on the specific facts of the funds involved. Special care must be used when relying on a corporation’s financial statements for information regarding charitable funds. The generally accepted accounting principles imposed by the Financial Accounting Standards Board on accountants require the classification of a non-profit corporation’s funds as either “unrestricted,” “temporarily restricted” or “permanently restricted.” These classifications may not always clearly reflect the different categories set forth above.3
2 The income may be either traditional accounting income or are a percentage of the total amount if the corporation has made an election under 15 Pa.C.S. §5548.
3 See Bullitt, “When FAS 116, FAS 117 and FAS 124 Meet State Law,” 68 PA CPA Journal 1 (Spring 1997).

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