When Can Restricted Fund Assets Become General?

At what point can a property purchased with a restricted fund become a general asset?

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Hi,

First time posting for please forgive me if I get the rules wrong. I'm not an accountant, but I am a new Treasurer for a Church charity.

15 years ago we purchased a property from funds donated for that specific purpose, and funds from a general fund. The specific donations were accounted for within a restricted fund. 

After some time the property was sold and the proceeds used to part purchase two other properties (A and B) in a shared ownership arrangement, purchased for the same purpose. 

Four years ago we obtained a mortgage to buy out the remaining half of property B and become sole owners.

Two years ago we sold our half of property A, and using the proceeds repaid the mortgage on B, with a surplus of £Xk.

Also, during this period B was placed on the rental market as it was no longer required for the purpose it was originally bought.

Is the original restriction on the purpose for the donations still applicable? If so, is it applicable on all the assets - the value of B and the £Xk surplus - or can any of it be viewed as now becoming a general asset?

If it is all restricted, how would one go about having the restriction lifted? Some donors are dead, others have moved away, but in large part most are still present and contactable.

Thank you for any help/advice you can give.

Replies (3)

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By Accountant A
16th Jan 2017 19:15

Legal matter, surely?

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Replying to Accountant A:
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By Neil Hughes
17th Jan 2017 09:11

Hi, thanks for the reply. You're almost certainly correct in that I can see this going to lawyers and the Charity Commission, but I was hoping that someone might be able to give an opinion of the situation and some advice. Has this been done before, experience, success/failure etc.

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By Penfold
17th Jan 2017 23:11

“When Can Restricted Fund Assets Become General?”

They can't

Unless you change the charitable objects to meet the restriction (unhelpful)

or have obtained permission from the Charity Commission

don’t waste your funds with useless solicitors

Ask the CC direct

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