What is an Accumulated Fund
An accumulated fund is the capital fund of a nonprofit organization. Money is directed into the accumulated fund when revenues are greater than expenditures and there is a budgetary surplus. Money is directed away from the accumulated fund (withdrawn) when expenditures are greater than revenues and there is a budgetary deficit. The term accumulated fund can also be used as a generic term to describe any fund that accumulates money over time for a particular purpose, although it is most commonly used in conjunction with a nonprofit organization.
BREAKING DOWN Accumulated Fund
Nonprofit organizations, such as clubs, societies and charities, have capital accounts known as accumulated funds. Accumulated funds include money that is set aside for the purchase of capital or fixed assets, including real property and certain equipment. The fund can also be used for the purpose of providing liquidity in times of budgetary deficits.
Example of an Accumulated Fund
For example, if XYZ Organization makes monetary gifts each year that total $100,000 and XYZ only brings in $99,000 for the year, it can take $1,000 from its accumulated fund to gift its full $100,000 amount for the year. If the following year it generates $150,000 but only gifts $100,000, it would hold the remaining $50,000 in the accumulated fund.