What is typically maintained through donor specifications in restricted funds?

The concept of donor specifications in restricted funds is primarily related to ensuring that the principal amount remains intact according to the donor's wishes. This means that the funds must be used in a manner that preserves the original contribution, only allowing for the income generated from those funds to be utilized for specific purposes outlined by the donor.

When funds are classified as restricted, it indicates that the donor has placed limitations on how the funds can be used. This preservation of the principal is crucial to uphold the integrity of the donation and to meet donor expectations, making principal maintenance a central goal in managing restricted funds. This practice also helps organizations build trust with their donors by adhering strictly to the intended use of the funds.

While interest generation, expense coverage, and capital growth may play roles in how restricted funds are managed, they are subordinate to the primary aim of maintaining the principal amount as specified by the donor. Therefore, principal maintenance accurately captures the essence and fundamental responsibility of managing restricted funds in accordance to donor specifications.