The Charity Commission’s regulations specify three types of funds which should be clearly set out in the PCC’s Annual Financial Statements, as follows:
This is money received by the church or PCC with the stipulation that the capital must be retained intact and only the interest earned on the capital can be spent. The donor might have insisted on this or, in the case of a legacy, the condition might be contained in the Will. These could be expendable in certain circumstances, depending once again on the terms of the donation or Will.
This is money received for a particular purpose from the outset. The intention of the donor(s) is the criteria in determining whether funds are restricted. For example, they might be responding to a specific appeal for fabric repairs or supporting a fundraising event in aid of the Organ Fund. In these cases the money (capital and income) has to be applied to the stated purpose.
These are monies received with no stipulation on how they should be spent, for example, church collections or stewardship income. These may be applied to pay general running expenses or to purchase any item agreed by the PCC. It may be decided to set funds aside for a particular purpose, which would then be held in a designated fund, but this would not stop the PCC later reallocating this money to another purpose.