Net Assets Without Donor Restrictions is revenue received that is not subject to the donor/grantor imposed restrictions, or reflects revenue that is released from restrictions and is transferred from the Donor Designated Fund. In other words, the revenue has no strings attached, or the obligations have been met, and the nonprofit can use the revenue wherever it needs it, or to match the donor designation.
For example, when a donor makes a contribution to a nonprofit and does not designate the use of the fund, then the revenue is classified in the “without donor restricted fund.” Or, if the donor designates their donation to be used to purchase medical supplies for a clinic, and the supplies have been purchased, the amount of the donation is transferred to the without donor restricted fund to match the expense. The Net assets represent the cumulative excess or deficiency of revenue minus expenses for the fund.
A nonprofit can set up multiple sub-categories of net asset funds as part of their internal reporting, such as board-designated funds and capital funds. Regardless of how many funds are set up in an internal accounting system, when it comes to reporting to the general public, they all must be consolidated into the two net asset categories.