Unrestricted funds

Unrestricted funds are the money trustees can actually direct. A general donation, most fundraising income, and unrestricted grants all land here, free to be spent on any of the charity’s purposes. It is the opposite of restricted funds, which are tied to a specific cause by the donor.

Unrestricted funds can be applied to any of the charity’s purposes at the trustees’ discretion, and are the source of a charity’s free reserves. (Source: Charities SORP fund accounting; GOV.UK, Charity reserves (CC19), accessed 9 July 2026.) Within unrestricted funds, trustees may also set aside designated funds for a planned commitment — but that is a self-imposed label they can remove.

Because unrestricted income is so flexible, it is worth protecting: it pays for core costs that restricted grants often will not. See how reserves are drawn from it in the free reserves entry and the UK Charity Compliance Handbook.