What are funds called that are established to account for assets with uses limited by donor or grantee requirements?

The correct designation for funds that are established to account for assets with uses limited by donor or grantee requirements is restricted funds. These funds are typically sourced from donations or grants, where the donor specifies that the money can only be used for particular purposes. This means that the organization receiving the funds must adhere strictly to the outlined limitations and can't use the money for other projects or operational costs that fall outside of these requirements.

In contrast, unrestricted funds are those that can be used at the organization's discretion without any specific limitations imposed by donors. Trust funds may carry certain obligations but are not specifically defined by donor-imposed limits. Capital funds usually relate to long-term investments or physical assets, rather than restrictions set by donors. Therefore, restricted funds are the most accurate term for these types of financial resources, as they emphasize the limitation on use imposed by donor or grantee specifications.