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Must scholarship fund be totally separate?

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Must scholarship fund be totally separate?

We are a 501(c)(3) organization and have a scholarship fund. The scholarship funds reside in the scholarship savings account until it is time for payment and are then transferred to the general account that has a checkbook attached. Is this considered commingling of funds?

I don’t see anything improper in transferring scholarship money to the checking account as a procedure for making scholarship distributions so long as it is fully accounted for and there is no leakage.  Charities often hold multiple “funds” given by various donors for different purposes in a single investment account and don’t have problems so long as they carefully account for the income and distributions from each “fund.”

Friday, April 17, 2009

Comments

I have found it useful to hold special funds in separate accounts. The bookkeeping can contain inaccuracies, (which we usually root out before filing our form 990). But the bank account has the correct amount in it, and that can be relied on. It's a simple way to prevent mistakes. I agree that transferring funds from a special account for the purpose of paying bills should not present any problem.

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