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9_Assignment 2_FASB (958-205-45_ (Pgs 24-35)

Other Presentation Matters 958-205-45-1 This Subtopic specifies certain basic information to be reported in financial statements of not-for-profit entities (NFPs). The requirements generally are no more stringent than requirements for business entities. The degree of aggregation and order of presentation of items of assets and liabilities in statements of financial position or of items of revenues and expenses in statements of activities of NFPs, although not specified, generally should be similar to those required or permitted for business entities. Particular formats for a statement of financial position, a statement of activities, or a statement of cash flows, are neither prescribed nor prohibited in part because similar prescriptions and proscriptions do not exist for business entities. 25 958-205-45-2 The usefulness of information provided by financial statements of NFPs can be vastly improved if certain basic information is classified in comparable ways. All NFPs shall do all of the following: a. Report assets and liabilities in reasonably homogeneous groups and sequence or classify them in ways that provide relevant information about their interrelationships, liquidity, and financial flexibility. b. Classify and report net assets in threetwo groups—permanently restricted, temporarily restricted, and unrestrictednet assets with donor restrictions and net assets without donor restrictions—based on the existence or absence of {add glossary link}donor-imposed restrictions{add glossary link}and the nature of those restrictions. Information about the nature and amount of restrictions imposed by donors on the use of contributed assets, including their potential effects on specific assets and on liabilities or classes of net assets, shall be disclosed in accordance with paragraph 958-210-50-3, because it is helpful in assessing the financial flexibility of an NFP. c. Aggregate items of revenues, expenses, gains, and losses into reasonably homogeneous groups and classify and report them as increases or decreases in net assets with donor restrictions or net assets without donor restrictionspermanently restricted, temporarily restricted, or unrestricted net assets. d. Classify and report cash receipts and cash payments as resulting from investing, financing, or operating activities. 958-205-45-3 Reporting by fund groups is not a necessary part of external financial reporting; however, this Subtopic does not preclude providing disaggregated information by fund groups. > Complete Set of Financial Statements 958-205-45-4 A complete set of financial statements of an NFP shall include a statement of financial position as of the end of the reporting period, a statement of activities and a statement of cash flows for the reporting period, and accompanying notes to financial statements. In addition, a voluntary health and welfare entity shall provide a statement of functional expenses. 958-205-45-5 A set of financial statements shall include, either in the body of financial statements or in the accompanying notes, that information required by generally accepted accounting principles (GAAP) orthat do not specifically exempt NFPs and required by applicable specialized accounting and reporting principles and practices unless NFPs are specifically exempt from providing that information. > Statement of Functional ExpensesReporting of Expenses by Nature and Function 26 958-205-45-6 A statement of functional expensesReporting expenses by nature and function is useful in associating expenses with service efforts and accomplishments of NFPs. All NFPsVoluntary health and welfare entities shall report information about all expenses in one location—on the face of the statement of activities, as a schedule in the notes to financial statements, or in a separate financial statement—as required by paragraph 958-720-45-15. The relationship between functional classification and natural classification for all expenses shall be presented in an analysis that disaggregates functional expense classificationsby their functional classes, such as major classes of program services and supporting activities, as well as information about expenses by their natural expense classificationsnatural classification (natural expense classification), such as salaries, rent, electricity, supplies, interest expense, depreciation, awards and grants to others, and professional feesfees, in a matrix format in a separate financial statement—the statement of functional expenses. Pursuant to paragraph 958-720-45-16, other NFPs are encouraged but not required to provide information about expenses by their natural classification. To the extent that expenses are reported by other than their natural classification (such as salaries included in cost of goods sold or facility rental costs of special events reported as direct benefits to donors), they shall be reported by their natural classification in the functional expense analysisif a statement of functional expenses is presented. For example, salaries, wages, and fringe benefits that are included as part of the cost of goods sold on the statement of activities shall be included with other salaries, wages, and fringe benefits in the statement of functional expensesexpense analysis. External and direct internal investment expenses that have been netted against investment return shall not be included in the functional expense analysis. Certain items that are typically reported in other comprehensive income of for-profit entities, such as those items listed in paragraph 220-10-45-10A, are considered gains or losses and, like other gains and losses, shall not be included in the functional expense analysis. See Note F in paragraph 958-205-55-21 for an example that illustrates the reporting of expenses by nature and function.In addition, expenses that are netted against investment revenues shall be reported by their functional classification on the statement of functional expenses (if the NFP presents that statement). > Expirations of Donor-Imposed Restrictions 958-205-45-9 An NFP shall recognize the expiration of a donor-imposed restriction on a contribution in the period in which the restriction expires. A restriction expires when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both. If two or more temporarydonor-imposed restrictions that are temporary in nature are imposed on a contribution, the effect of the expiration of those restrictions shall be recognized in the period in which the last remaining restriction has expired. 958-205-45-10 For example, a gift of a term endowment that is to be invested for five years has two temporarydonor-imposed restrictions that are temporary in 27 nature—a purpose restriction (to be invested) and a time restriction (for a period of five years). After five years of investing, the purpose restriction will be met and the time restriction will lapse. In Year 5, when that term endowment becomes unrestrictedis no longer donor-restricted, a reclassification of net assetsreclassification shall be reported to reflect the decrease in net assets with donor restrictionstemporarily restricted net assets and the increase in net assets without donor restrictionsunrestricted net assets. 958-205-45-10A In determining when the last of two or more temporarydonorimposed restrictions that are temporary in nature has expired, explicit donor stipulations generally carry more weight than implied restrictions. For example, assume in Year 1 that an entity receives an unconditional promise to give that is payable in two equal installments in Years 2 and 3 with an explicit donor stipulation that its gift is to cover purchases of new equipment for the new School of Chemistry, which is expected to be completed in Year 3. That gift would have a purpose restriction (to be used to acquire new equipment to be housed in the new building), and because the unconditional promise is payable in Years 2 and 3, an entity generally would imply a time restriction (see paragraph 958-605-45-5). If, however, the building was completed early and opened in Year 2 and all of the needed equipment was purchased in Year 2 and exceeded the promised amount, absent an explicit stipulation to the contrary, it would be reasonable to conclude that those purchases fulfilled the donor restriction on the promised gift. Because the entity did not adopt a policy of implying time restrictions on long-lived assets in accordance with paragraph 958-205-45-12, theThe restriction for the purchase of the equipment expires when the equipment is placed in service in accordance with paragraph 958-205-45-12. In addition, a reclassificationreclassification of net assets would be reported to reflect the decrease in net assets with donor restrictionstemporarily restricted net assets and the increase in net assets without donor restrictionsunrestricted net assets in Year 2. 958-205-45-11 If an expense is incurred for a purpose for which both net assets without donor restrictionsunrestricted and net assets with donor restrictionstemporarily restricted net assets are available, a donor-imposed restriction is fulfilled to the extent of the expense incurred unless the expense is for a purpose that is directly attributable to another specific external source of revenue. For example, an expense does not fulfill an existing donor restriction if that expense is incurred for a purpose that is directly attributable to and reimbursed by a sponsored exchange agreement or a conditional award from a government agency, private foundation, or others. Temporarily restricted net assets with time restrictions are not available to support expenses until the time restrictions have expired.Explicit time restrictions, such as those discussed in paragraph 958-205- 45-10, and implied time restrictions, such as those discussed in paragraph 958- 605-45-5, make net assets unavailable to support expenses until the time restrictions have expired. 958-205-45-12 Time restrictions implied on gifts of long-lived assets pursuant to paragraph 958-605-45-6 expire as the economic benefits of the acquired assets 28 are used up; that is, over their estimated useful lives. In the absence of donor stipulations specifying how long donated assets must be used or an NFP’s policy of implying time restrictions,Unless donor stipulations limit the use of the assets for a period of time or for a particular purpose, donor restrictions on long-lived assets, if any, or cash to acquire or construct long-lived assets expireare considered to have expired when the assets are placed in service. > Reporting Endowment Funds 958-205-45-13 Endowment funds are established either by a donor or by a governing board and can be either with donor restrictions or without donor restrictions. Endowment funds with donor restrictions are referred to as donorrestricted endowment funds. A donor-restricted endowment fund results from a gift with a stipulation that the resources be invested either for a long, specified period of time or in perpetuity. Those without donor restrictions are referred to as board-designated endowment funds (sometimes called funds functioning as endowment or quasi-endowment funds). A board-designated endowment fund is created when a governing board designates or earmarks a portion of its net assets without donor restrictions to be invested, generally for a long but possibly unspecified period of time. A donor’s stipulation that requires a gift to be invested in perpetuity or for a specified term creates a donor-restricted endowment fund. Alternatively, an NFP’s governing board may earmark a portion of its unrestricted net assets as a board-designated endowment (sometimes called funds functioning as endowment or quasi-endowment funds) to be invested to provide income for a long but unspecified period. 958-205-45-13A An NFP shall report the net assets of an endowment fund in a statement of financial position within the following two classes of net assets on the basis of the existence or absence of donor-imposed restrictions: a. Net assets with donor restrictions. For example, a donor-restricted endowment would be classified as net assets with donor restrictions. b. Net assets without donor restrictions. For example, a boarddesignated endowment fund, which generally results from an internal designation of net assets without donor restrictions, would thus generally be classified as net assets without donor restrictions. In rare circumstances, a board-designated endowment fund also can include a portion of net assets with donor restrictions. For example, if an NFP is unable to spend donor-restricted contributions in the near term, then the board sometimes considers the long-term investment of these funds. 958-205-45-13B When classifying a donor-restricted endowment fund, consideration shall be given to both the donor’s explicit stipulations and the applicable laws that extend donor restrictions. Investment return generally is considered free of donor restrictions unless its use is limited by a donor-imposed 29 restriction or by law. In the United States, most donor-restricted endowment funds are subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) that extends a donor’s restriction to use of the funds, including the investment return, until the funds are appropriated for expenditure by the governing board. Thus, if a donor or law imposes a restriction on the investment return, those returns shall be reported within net assets with donor restrictions until appropriated for expenditure. Conversely, for an endowment fund that is created by a governing board (board-designated endowment fund), assuming no other purpose-type restrictions exist on the use of those funds, that original fund and all investment returns are free of donor restrictions and shall be reported in net assets without donor restrictions. 958-205-45-13C Paragraphs 958-205-45-13D through 45-13F provide guidance for classification of net assets of donor-restricted endowment funds for NFPs that follow an enacted version of UPMIFA. 958-205-45-13D Donor-restricted endowment funds generally result from a donor’s stipulation or by extension of a donor restriction imposed through UPMIFA that limits an NFP’s use of an endowment fund. The original gifted amount, any additional gifts to that fund, and any resulting investment returns shall initially be classified as net assets with donor restrictions. Therefore, unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until they are appropriated for expenditure by the NFP’s governing board. Donors may provide specific instructions on spending from a donor-restricted endowment fund or from the components of investment return generated from the fund. 958-205-45-13E The amount of net assets with donor restrictions in the donorrestricted endowment fund is reduced when the governing board appropriates for expenditure funds from the endowment fund. Upon appropriation for expenditure, the restriction expires to the extent of the amount appropriated as long as all of the time restrictions have lapsed and all of the purpose restrictions have been met. At that time, the appropriated amount is reclassified from net assets with donor restrictions to net assets without donor restrictions in accordance with paragraph 958-205-45-9. However, if purpose restrictions from a donor have not yet been met, those funds shall remain in net assets with donor restrictions until those purpose restrictions have been satisfied. 958-205-45-13F In the absence of interpretation of the phrase appropriated for expenditure in subsection 4(a) of the Uniform Prudent Management of Institutional Funds Act of 2006UPMIFA (see paragraph 958-205-05-10) by legal or regulatory authorities (for example, court decisions or interpretations by state attorneys general), for purposes of the guidance in this Subtopic, appropriation for expenditure is deemed to occur upon approval for expenditure, unless approval is for a future period, in which case appropriation is deemed to occur when that period is reached. Approval for expenditure may occur through different means within and across NFPs. For example, expenditures could be approved as part of a formal, annual budget. Expenditures also could be approved during the year as 30 unexpected needs arise (such as for emergency relief efforts). Upon appropriation for expenditure, the time restriction expires to the extent of the amount appropriated and, in the absence of any purpose restrictions, results in a reclassification of that amount to unrestricted net assets. If the fund is also subject to a purpose restriction, the reclassification of the appropriated amount to unrestricted net assets shall not occur until that purpose restriction also has been met, in accordance with the guidance beginning in paragraph 958-205-45-9. [Content amended as shown and moved from paragraph 958-205-45-31] 958-205-45-13G As discussed in paragraph 958-205-05-8, some NFPs follow trust law. For donor-restricted endowment funds that are subject to trust law, typically at least, the amount of the original gift(s) and any gains or net appreciation of the fund are not considered to be available for expenditure. Generally, interest, dividends, rents, or other forms of ordinary income are available for spending and are classified as net assets without donor restrictions unless a purpose or other donor restriction exists on use of the investment income. 958-205-45-13H If a donor-restricted endowment fund is an underwater endowment fund, the accumulated losses shall be included together with that fund in net assets with donor restrictions. An NFP shall disclose the required information in accordance with paragraph 958-205-50-2. 958-205-45-13I See Note E of Example 1 (paragraph 958-205-55-21) for an encouragedillustrative disclosure about endowment funds and investment management policies. [Content amended as shown and moved from paragraph 958-205-45-26] 958-205-45-13J See Example 1 (paragraph 958-205-55-2) for an illustration of a statement of activities, showing support from both a donor-restricted endowment fund and a board-designated endowment fund, along with a statement of financial position, statement of cash flows, and example notes for an NFP. 958-205-45-14 Paragraph superseded by Accounting Standards Update No. 2016-14.When classifying an endowment fund, each source—original gift, gains and losses, and interest and dividends—must be evaluated separately. Each source is unrestricted unless its use is temporarily or permanently restricted by explicit donor stipulations or by law. Thus, an endowment fund that is created by a governing board from unrestricted net assets is classified as unrestricted because all three sources are free of donor restrictions. If an endowment fund is created by a donor, the donor may have placed different restrictions on each of the three sources. Generally, classification of the original gifts and the income earned by endowments is straightforward because usually donors explicitly state any time or purpose restrictions on those two sources. Determining how to classify gains on endowments may not be as easy because agreements with donors often are silent on how gains should be used and whether losses must be restored immediately from future gains, or not at all. See paragraphs 958-205-45-16 through 45-21. 31 > > Net Assets of an Endowment Fund 958-205-45-15 Paragraph superseded by Accounting Standards Update No. 2016-14.Pursuant to paragraph 958-210-45-1, an NFP shall report the net assets of an endowment fund in a statement of financial position within the three classes of net assets based on the existence or absence of donor-imposed restrictions: a. Permanently restricted net assets. For example, the portion of a permanent endowment that must be maintained permanently—not used up, expended, or otherwise exhausted—is classified as permanently restricted net assets. b. Temporarily restricted net assets. For example, the portion of a term endowment that must be maintained for a specified term is classified as temporarily restricted net assets. c. Unrestricted net assets. For example, a board-designated endowment fund, which results from an internal designation on unrestricted net assets, is not donor restricted and is classified as unrestricted net assets. 958-205-45-15A Paragraph superseded by Accounting Standards Update No. 2016-14.Paragraphs 958-205-45-16 through 45-27 provide guidance for classification of net assets of donor-restricted endowment funds. In addition, see paragraphs 958-205-45-28 through 45-32 for guidance on classification of donorrestricted endowment funds in states with law based on the Uniform Prudent Management of Institutional Funds Act of 2006 or paragraphs 958-205-45-33 through 45-36 in states with law based on trust law or the Uniform Management of Institutional Funds Act of 1972. > > Net Appreciation (Net Gains) of Endowment Funds 958-205-45-16 Paragraph superseded by Accounting Standards Update No. 2016-14.Restricted net assets result only from a donor’s stipulation that limits an NFP’s use of net assets or from a law that extends the donor’s stipulation to enhancements (including holding gains) and diminishments of those net assets. 958-205-45-17 Paragraph superseded by Accounting Standards Update No. 2016-14.Thus, unless gains and losses are temporarily or permanently restricted by a donor’s explicit stipulation or by a law that extends a donor’s restriction to them, gains and losses on investments of a donor-restricted endowment fund are changes in unrestricted net assets. 958-205-45-18 Paragraph superseded by Accounting Standards Update No. 2016-14.For example, if a donor stipulates that net gains be added to the principal of its gift until that endowed gift plus accumulated gains increases to a specified dollar level, the gains are permanently restricted. Similarly, if a donor states that a specific investment security must be held in perpetuity, the gains and losses on that security are subject to that same permanent restriction unless the donor specifies otherwise. However, if a donor allows the NFP to choose suitable 32 investments, the gains are not permanently restricted unless the donor or the law requires that an amount be retained permanently. Instead, those gains are unrestricted if the investment income is unrestricted or are temporarily restricted if the investment income is temporarily restricted by the donor. 958-205-45-19 Paragraph superseded by Accounting Standards Update No. 2016-14.If net gains are available for use by the NFP, those gains are not permanently restricted and classifying those gains as permanently restricted would be misleading. 958-205-45-20 Paragraph not used. 958-205-45-21 Paragraph superseded by Accounting Standards Update No. 2016-14.If the governing board determines that the relevant law requires the NFP to retain permanently some portion of gains on investment assets of endowment funds, that amount shall be reported as an increase in permanently restricted net assets. 958-205-45-21A Paragraph superseded by Accounting Standards Update No. 2016-14.If an NFP is subject to a law or regulation that its governing board interprets as requiring the maintenance of purchasing power for donor-restricted endowment funds, then the NFP shall periodically adjust the amount in permanently restricted net assets to reflect that interpretation. Under those circumstances, an NFP shall use the inflation (deflation) index (or indexes) that it deems most relevant for adjusting the permanently restricted net assets of the funds (for example, the Consumer Price Index or the Higher Education Price Index). [Content amended and moved to paragraph 958-205-50-1C] > > Losses and Other Accounting Disclosures of an Endowment Fund 958-205-45-22 Paragraph superseded by Accounting Standards Update No. 2016-14.In the absence of donor stipulations or law to the contrary, losses on the investments of a donor-restricted endowment fund shall reduce temporarily restricted net assets to the extent that donor-imposed temporary restrictions on net appreciation of the fund have not been met before the loss occurs. Any remaining loss shall reduce unrestricted net assets. 958-205-45-23 Paragraph superseded by Accounting Standards Update No. 2016-14.The classification of losses on investments of an endowment fund created by a board designation of unrestricted funds is straightforward; the losses are classified as reductions in unrestricted net assets because all sources of that endowment fund—original amount, gains and losses, and interest and dividends— are free of donor restrictions. 958-205-45-24 Paragraph superseded by Accounting Standards Update No. 2016-14.If losses reduce the assets of a donor-restricted endowment fund below the level required by the donor stipulations or law, gains that restore the fair value 33 of the assets of the endowment fund to the required level shall be classified as increases in unrestricted net assets. 958-205-45-25 Paragraph superseded by Accounting Standards Update No. 2016-14.See Example 2 (paragraph 958-205-55-22) for a four-year illustration showing the contributions, investment income, and investment gains and losses of a donor-restricted endowment fund. 958-205-45-26 Paragraph superseded by Accounting Standards Update No. 2016-14.See Note E of Example 1 (paragraph 958-205-55-21) for an encouraged disclosure about endowment funds and investment management. [Content amended and moved to paragraph 958-205-45-13I] 958-205-45-27 Paragraph superseded by Accounting Standards Update No. 2016-14.See Example 1 (paragraph 958-320-55-4) for an illustration of a statement of activities and example notes for an NFP that separates investment return into operating and nonoperating amounts based on a spending-rate or total return policy for managing its endowment funds. > > > Classification of Donor-Restricted Endowment Funds Subject to UPMIFA 958-205-45-28 Paragraph superseded by Accounting Standards Update No. 2016-14.An NFP that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) shall classify a portion of a donor-restricted endowment fund of perpetual duration as permanently restricted net assets. The amount classified as permanently restricted shall be either: a. The amount of the fund that must be retained permanently in accordance with explicit donor stipulations (see paragraphs 958-605-45-3 through 45-4) b. The amount of the fund that, in the absence of explicit donor stipulations, the NFP’s governing board determines must be retained (preserved) permanently consistent with the relevant law (see paragraph 958-205-45- 21). For implementation guidance on understanding legal requirements, see paragraph 958-205-55-1. 958-205-45-29 Paragraph superseded by Accounting Standards Update No. 2016-14.Consistent with the guidance in paragraphs 958-205-45-17 through 45- 18 and paragraph 958-205-45-22, the portion of a donor-restricted endowment fund that is classified as permanently restricted net assets is not reduced by losses on the investments of the fund, except to the extent required by the donor, including losses related to specific investments that the donor requires the NFP to hold in 34 perpetuity. Likewise, the amount of permanently restricted net assets is not reduced by an NFP’s appropriations from the fund. 958-205-45-30 Paragraph superseded by Accounting Standards Update No. 2016-14.For each donor-restricted endowment fund for which the restriction described in subsection 4(a) of the Uniform Prudent Management of Institutional Funds Act of 2006 applies (see paragraph 958-205-05-10), an NFP shall classify the portion of the fund that is not classified as permanently restricted net assets as temporarily restricted net assets (time restricted) until appropriated for expenditure by the NFP. 958-205-45-31 Paragraph superseded by Accounting Standards Update No. 2016-14.In the absence of interpretation of the phrase appropriated for expenditure in subsection 4(a) of the Uniform Prudent Management of Institutional Funds Act of 2006 (see paragraph 958-205-05-10) by legal or regulatory authorities (for example, court decisions or interpretations by state attorneys general), for purposes of the guidance in this Subtopic, appropriation for expenditure is deemed to occur upon approval for expenditure, unless approval is for a future period, in which case appropriation is deemed to occur when that period is reached. Approval for expenditure may occur through different means within and across NFPs. For example, expenditures could be approved as part of a formal, annual budget. Expenditures also could be approved during the year as unexpected needs arise (such as for emergency relief efforts). Upon appropriation for expenditure, the time restriction expires to the extent of the amount appropriated and, in the absence of any purpose restrictions, results in a reclassification of that amount to unrestricted net assets. If the fund is also subject to a purpose restriction, the reclassification of the appropriated amount to unrestricted net assets shall not occur until that purpose restriction also has been met, in accordance with the guidance beginning in paragraph 958-205-45-9. [Content amended and moved to paragraph 958-205-45-13F] > > > > Initial Application 958-205-45-32 Paragraph superseded by Accounting Standards Update No. 2016-14.In initially applying the guidance in this Subtopic to a donor-restricted endowment fund in existence when an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 is first effective: a. The NFP shall report any resulting net asset reclassification in a separate line item within the NFP’s statement of activities for that period, outside the performance indicator or other intermediate measure of operations, if one is presented. b. Any amounts within a donor-restricted endowment fund that were previously considered available to meet a purpose restriction under the guidance in paragraph 958-205-45-11, but that have never been appropriated for expenditure, shall, like other unappropriated amounts in 35 that fund, be considered unavailable until appropriated, and, therefore, the purpose restriction previously considered fulfilled shall be considered reinstated. > > Classification of Donor-Restricted Endowment Funds Subject to Trust Law or to Uniform Management Institutional Funds Act of 1972 958-205-45-33 Paragraph superseded by Accounting Standards Update No. 2016-14.In states that have enacted a version of the Uniform Management of Institutional Funds Act of 1972 (UMIFA) or states whose relevant law is based on trust law, it is generally understood that at least the amount of the original gift(s) and any required accumulations is not expendable, although the value of the investments purchased may occasionally fall below that amount. Future appreciation of the investments generally restores the value to the required level. In states that have enacted its provisions, the Uniform Management of Institutional Funds Act of 1972 describes “historic dollar value” as the amount that is not expendable. 958-205-45-34 Paragraph superseded by Accounting Standards Update No. 2016-14.In the absence of a law or a donor’s explicit or clear implicit permanent restriction, net appreciation shall be reported as unrestricted if the endowment’s income is unrestricted or temporarily restricted if the endowment’s income is temporarily restricted by the donor. Decisions about when to spend resources generally do not bear on the issue, which is whether the resources are available for spending. A restriction expires when an expense is incurred for the restricted purpose, regardless of whether an amount is appropriated. 958-205-45-35 Paragraph superseded by Accounting Standards Update No. 2016-14.Legal limitations may require the governing board to act to appropriate net appreciation for expenditure under a statutorily prescribed standard of ordinary business care and prudence. Reference to a standard of ordinary business care and prudence does not extend a donor-imposed restriction to the net appreciation on investments of a donor restricted endowment fund. A requirement to exercise ordinary business care and prudence is not a limitation that is more specific than the broad limits of the environment in which charitable and other NFPs operate. Thus, a legal limitation that requires that a governing board exercise ordinary business care and prudence when appropriating net appreciation is not the equivalent of a law that extends a donor-imposed restriction and, therefore, by itself, does not result in classification of net appreciation as donor-restricted, either permanently or temporarily.