# What are unrestricted funds?

**Unrestricted funds**: Unrestricted funds are income a charity's trustees can spend at their discretion on any of the charity's objects, as the Charity Commission's reserves guidance defines them. They include general donations, trading income and grants for general purposes. Reserves are the freely available part.

- Also called: unrestricted income, general funds, unrestricted grants, free reserves
- Author: OpenGrant
- Updated: 2026-10-26
- Canonical URL: https://opengrant.co.uk/glossary/unrestricted-funds

Unrestricted funds are income a charity's trustees can spend at their discretion on any of the charity's purposes. The Charity Commission's reserves guidance defines them as "income or income funds which can be spent at the discretion of the trustees in furtherance of any of the charity's objects", and defines reserves as "that part of a charity's unrestricted funds that is freely available to spend". Designated funds are unrestricted money the trustees have earmarked for a use; the earmark can be lifted.

**Why it matters when applying.** Unrestricted income is what pays for everything a project grant does not: the gap between a grant and the real cost, the months between grants, and the overheads a funder declines to cover. Funders read the funds columns in your accounts to see how dependent you are on [restricted funds](https://opengrant.co.uk/glossary/restricted-funds) and whether your reserves policy is credible. [Charity reserves in a grant application](https://opengrant.co.uk/blog/charity-reserves-grant-application) explains what to show and how to explain a low or high figure.

**Unrestricted grants.** Some funders give money for your general purposes rather than a project. Trust for London's funding page on 26 October 2026 listed project and unrestricted grants for organisations working on economic and social justice in London; City Bridge Foundation's Economic Justice programme described five-year core and flexible grants; and the Tudor Trust said multi-year core grants were its usual form. An unrestricted grant is still a grant with conditions, so read the agreement. [Core funding](https://opengrant.co.uk/glossary/core-funding) describes the related but distinct idea of funding running costs.

**Example.** A fictional disability charity has total funds of £180,000: £110,000 restricted to three projects, £20,000 designated for a building repair and £50,000 free reserves, about three months of running costs. Its reserves policy states the target and the reason, which is what a funder's finance check wants to see.

## Frequently asked questions

### What counts as unrestricted funds?

Any income the trustees may spend on any of the charity's purposes: general donations, membership fees, trading profits, investment income on unrestricted capital, and grants given for the charity's general purposes rather than a named project. Designated funds are still unrestricted; the trustees have earmarked them but can change their minds.

### Which funders give unrestricted grants?

A growing number, usually framed as core or flexible funding. On 26 October 2026 Trust for London offered project and unrestricted grants to London organisations, City Bridge Foundation described its Economic Justice grants as core and flexible, and the Tudor Trust said multi-year core grants were usual. Read each funder's guidance: an unrestricted grant may still come with reporting conditions.

### What are free reserves?

The part of unrestricted funds a charity could spend tomorrow: unrestricted funds less the amount tied up in fixed assets and less any designated funds the trustees have set aside. The Charity Commission describes reserves as the part of unrestricted funds that is freely available to spend on any of the charity's purposes.

## Read more

- [How to read a grant-making trust's accounts and annual return](https://opengrant.co.uk/blog/how-to-read-a-grant-making-trusts-accounts)
- [Trust fundraising prospect research: how to find out who funds charities like yours](https://opengrant.co.uk/blog/trust-fundraising-prospect-research)
- [What is a grant-making trust and how do you approach one?](https://opengrant.co.uk/blog/what-is-a-grant-making-trust)
- [Grants for charities and community groups](https://opengrant.co.uk/grants/for/charities)

## Related terms

- [Restricted funds](https://opengrant.co.uk/glossary/restricted-funds): Restricted funds are money a charity holds that can only be spent on the purpose the donor specified. Charity Commission guidance defines them as funds subject to specific trusts declared by the donors or with their authority. Most project grants are restricted and accounts report them separately.
- [Core funding](https://opengrant.co.uk/glossary/core-funding): Core funding is a grant that pays for the costs of running an organisation as a whole, such as management salaries, rent, finance, IT and governance, rather than for one time-limited project. It is often unrestricted but not always, and funders that offer it assess the organisation, not a project.
- [Full cost recovery](https://opengrant.co.uk/glossary/full-cost-recovery): Full cost recovery is the budgeting method that adds a fair share of an organisation's overheads, such as management, premises, finance and IT, to the direct costs of a project, so that a grant pays what the work really costs. The National Lottery Community Fund accepts it; some funders cap it.

## Sources and further reading

- [Charity Commission: Charity reserves, building resilience (CC19)](https://www.gov.uk/government/publications/charities-and-reserves-cc19/charities-and-reserves)
- [Trust for London: Funding](https://trustforlondon.org.uk/funding/)

Full glossary: https://opengrant.co.uk/glossary.md