One sentence, one classification
A gift agreement can run four pages, and the sentence that actually determines a fund's accounting treatment — whether the donor intended the principal to remain permanently invested, or only for a term, or not at all — is often one clause in the middle of it, phrased in language a donor's attorney wrote decades ago and nobody on the current finance team has re-read since.
This page describes how gift agreements and the documents that define a fund's terms are read and organized so that language is surfaced clearly against the fund it governs, not to make the classification call itself, but to remove the manual re-reading step where the actual controlling sentence gets missed.
Why this isn't a simple yes-or-no field
A gift agreement rarely says "this is a donor-restricted fund" in so many words. Instead it describes a purpose, a spending limit, sometimes a reversion clause if the purpose can no longer be fulfilled, and occasionally language that's ambiguous even to an experienced reader about whether the principal itself must remain invested or can eventually be spent.
Getting the classification right means actually reading that language, every time, for every fund — not applying a template based on the fund's name or its size, both of which are unreliable signals of what the underlying gift instrument actually says.
What this doesn't decide
Doesn't apply ASC 958 for you
It surfaces the language. Deciding what that language means for net-asset classification is an accounting judgment that stays with your controller or CPA.
Doesn't resolve genuinely ambiguous wording
Where a clause could reasonably be read two ways, it's flagged for your review — the same rule applied to any field read with real uncertainty.
Doesn't interpret legal effect
Whether a specific clause is enforceable, or how state law treats an ambiguous restriction, is a question for counsel, not a document-reading tool.
The two classes, and how funds move between them
Under current accounting standards, nonprofit net assets fall into two classes: with donor restrictions, and without. A fund can move from the first to the second when a donor releases a restriction in writing, or when a time or purpose restriction is satisfied — a scholarship fund whose purpose restriction is spent down each year, for instance, releasing that portion from restriction as it's used.
Tracking that movement accurately depends on having both the original restriction language and any later release or satisfaction documented and dated — which is exactly the kind of multi-document trail that's easy to lose across a fund's multi-decade life if it only exists in a paper file.
What gets read
| Field | Typical source |
|---|---|
| Fund name and gift date | Gift agreement, pledge agreement |
| Purpose or use restriction | Gift agreement's stated intent clause |
| Corpus / principal treatment | Language on whether principal is permanently invested |
| Reversion or default clause | What happens if the purpose can no longer be fulfilled |
| Later releases or amendments | Donor correspondence, board minutes |
How it works
Upload the gift agreement and any related documents
The original instrument, plus any amendment, correspondence or board memo that touches the same fund.
Each document is read on its own
Restriction language, dates and fund references extracted from each document's own text.
Surfaced against the fund
The relevant clauses organized clearly, with the source document and page reference attached.
Ambiguous language flagged, not guessed
A clause that's genuinely unclear is marked for your review instead of silently classified.
Exported
Excel, CSV or JSON, ready for your classification decision.
A gift agreement, read
A four-page gift agreement establishing a $250,000 scholarship endowment is uploaded. The relevant clause — buried on page three — is surfaced clearly.
| Field | Extracted |
|---|---|
| Fund purpose | Scholarships for first-generation students |
| Corpus treatment | "Principal shall be held in perpetuity" |
| Spending limit | Income only, per board-approved spending policy |
| Classification signal | Donor-restricted — permanently restricted corpus |
The controller confirms the classification in under a minute, with the exact clause already quoted and linked to its page, instead of re-reading the full four-page agreement from the start.
Board-designated funds vs. donor restrictions
A quasi-endowment — money the board itself has chosen to invest and treat as endowment, without any donor restriction requiring it — is created by a board resolution, not a gift agreement, and critically, the board can reverse that designation. Reading a board memo the same way a gift agreement is read surfaces that distinction clearly, which matters because a quasi-endowment fund is classified as net assets without donor restrictions even though it sits alongside true endowments in the same investment pool.
Manual vs. automatic
| Manual | Automatic |
|---|---|
| Full gift agreement re-read each time a question arises | Relevant clause surfaced immediately, with page reference |
| Later amendments tracked separately, easy to lose | Amendments linked to the same fund automatically |
| Ambiguous language interpreted informally, undocumented | Flagged clearly for a documented review decision |
From a handful of gifts to a full endowment
A single gift agreement is an afternoon's reading. A foundation with several hundred named funds, each with its own agreement and possibly its own amendments over decades, turns the same task into an archive project — one that's easy to defer until an auditor specifically asks for it.
Reading every agreement the same way, regardless of how many funds exist, keeps the effort per document flat as the endowment grows — what changes is only how many clauses need a human judgment call, which stays a small fraction of the total.
Who uses this
Nonprofit controllers
Classification language surfaced clearly, without re-reading a full agreement each time.
Foundation gift officers
New gift agreements read and organized the moment they're signed.
Independent auditors
The controlling clause for a sampled fund, already located and quoted.
Boards reviewing quasi-endowment designations
A clear record of which funds carry a donor restriction and which don't.
Why traceability matters more than a clean label
A spreadsheet that simply labels each fund "restricted" or "unrestricted" without the underlying language behind it is easy to trust until an auditor asks why a specific fund was classified that way. Keeping the exact clause, its source document and its page reference attached to every fund turns that question from a scramble back through old files into an answer that's already sitting in the record.
Get started with your first gift agreement
Upload one gift agreement to see how the language gets surfaced — no signup required to try it. See the full overview of endowment fund accounting for how this fits into the rest of the reconciliation.
Gift acceptance policy alignment
Most organizations maintain a gift acceptance policy setting boundaries on what kinds of restrictions they'll agree to — a minimum fund size for a named endowment, limits on how narrowly a purpose can be defined, requirements around a spending or reversion clause. Having a new gift agreement's actual language surfaced clearly makes it straightforward to check against that policy before the gift is finalized, rather than discovering a mismatch after the agreement is signed.
That comparison itself — deciding whether a specific gift's terms fit within policy, and whether an exception is warranted — remains a decision for the gift acceptance committee or board, not something this reads or decides on its own.
Multi-year pledges and installment gifts
A significant gift is often structured as a pledge paid over several years rather than a single lump sum — an initial cash payment followed by scheduled installments, sometimes with their own acknowledgment letters arriving on different dates. Each of these documents needs to be connected back to the original pledge agreement's fund, so the full commitment's history stays intact even as individual payments arrive months or years apart.
Reading each installment document as it arrives, and linking it automatically to the fund its pledge agreement established, keeps that connection from depending on someone remembering which payment belongs to which multi-year commitment.
Keeping a full amendment history
A gift agreement's terms sometimes change after the original signing — a donor agrees to broaden a narrow purpose restriction, or a reversion clause gets triggered and replaced with a new designated use. Each of these changes is its own dated document, and keeping the complete sequence — original agreement, then every amendment in order — is what allows a fund's classification to be explained correctly for any specific point in its history, not just its current state.
How often a board should re-review classifications
Beyond the annual audit cycle, many finance committees find value in a lighter, more frequent internal review — a quarterly spot-check of a handful of funds against their gift agreements, rather than waiting for the full portfolio to be reviewed once a year. Because the underlying language is already surfaced and organized, that kind of periodic spot-check takes minutes rather than requiring a special project each time.
Common language patterns worth recognizing
Certain phrases recur often enough across gift agreements to be worth knowing on sight: "held in perpetuity" or "principal shall remain invested" typically signals a true endowment; "may be expended at the board's discretion" often signals a term or quasi-endowment; a reversion clause naming an alternate beneficiary if the original purpose fails signals a condition worth tracking separately. None of these phrases are a substitute for reading the full agreement, but recognizing them speeds up an initial read considerably.
Having the full text searchable and organized by fund makes it possible to check for these patterns across an entire portfolio at once — useful when a new accounting question prompts a review of how many funds use a particular kind of clause.
Passing restriction records to a new team member
A gift officer or controller who leaves an organization often takes informal knowledge with them — which funds have an unusual restriction, which gift agreements are worth a second look, which donor's intent was genuinely ambiguous and resolved through a conversation rather than the written document alone. Keeping that context recorded alongside the surfaced language, not just in one person's memory, is what makes a transition manageable rather than a scramble to rediscover institutional knowledge.
The recurring theme across every scenario
Whatever the specific situation — a new gift, an audit sample, a board question about a fund established decades ago — the underlying need is the same: the exact language a donor or the board used, findable and readable without re-reading an entire document from scratch. That's the specific, narrow problem this addresses, deliberately not trying to also be the classification decision itself.
Foundations that adopt this as a routine step — reading every new gift agreement the day it arrives rather than filing it away for a future review — tend to find that the annual classification exercise stops being an annual scramble at all, because most of the work has already happened incrementally throughout the year.
When a donor renews or expands an existing gift
A donor who has already established one fund sometimes comes back years later to add to it, or to establish a related fund with slightly different terms — a scholarship endowment that later gets a companion fund for emergency student aid, for instance. Reading the new agreement against the original makes it clear whether the new gift extends the existing fund's terms or creates a genuinely separate classification, a distinction that's easy to blur if the new document isn't compared carefully against what came before.
Why this stays a narrow tool by design
It would be tempting to have a document reader also render a final classification verdict, but that temptation is exactly what this deliberately avoids. Restriction language is legal language, written by different attorneys over different decades with different conventions, and the cost of a confidently wrong automatic classification is far higher than the cost of a human spending an extra minute confirming what the surfaced clause actually means.
Security and privacy
Uploads are encrypted with TLS from end to end.
Processing runs on infrastructure with SOC 2-aligned controls.
Original documents are deleted shortly after processing.
Nothing you upload is ever used to train AI models.