Members of the board of our nonprofit want to use funds the board has previously designated for capital improvements to expand our services during the coronavirus crisis. It was the board that designated these funds into a capital improvement account. Not a donor. Can the board reverse that designation and use the money for whatever they want?
Yes. The board can “undesignate” the fund and use them for another purpose (consistent with your organization’s mission, of course). If third party donors contributed to a specific fund that the board had said would be used for capital improvements, those third party donations would be considered “restricted” as the result of the solicitation saying or implying that they would be used for capital improvements. Under the Uniform Prudent Management of Institutional Funds Act (See Ready Reference Page: “New UPMIFA Sets Rules For Management of Charitable Funds”), those donors could “unrestrict” their donations and I would not want to change the use of the amounts that they contributed without their approval. But the board can take its own action on the funds that it has unilaterally designated.
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