Is it consider a misuse of funding if a 501c3 uses funds out of a general fund for an engineer survey that should have been paid for with funds from a capital campaign? People are solicited for funds and informed their donations are going towards the care of the animals in every plea. There is never a mention of the building fund. These people are donating to the general fund to help support the animals of a shelter, and the Board of Directors are spending $20,000 out of this account to do an engineering survey on their leased piece of property. There has been no capital campaign started, and they have had a signed lease on this property for almost 1 year. I know you cannot use capital funding for anything else, but what it is collected for, but I did not know if it were true about the reverse.

The organization can use their operating funds for any use they want (as long as it fits within the charter of the organizatoin). The only caveat is that any money donated with restrictions must be ear-marked for the purpose intended by the donor. This does not appear to be a misuse of funds at all.

In the period leading up to a capital campaign it is quite normal to incur expenses . My suggestion would be to set up a separate operating fund to track campaign costs. This where you would book all expenses associated with the campaign, starting as soon as possible. Then you get a resolution from the board that authorizes the transfer of money from the general fund to the campaign fund to pay these expenses, with the commitment by the board to have the campaign fund pay the general fund back once the campaign gets under way. Other expenses that you may incur prior to the official launch of the campaign may include things like feasibility studies, travel to visit potential major donors, and consultants' fees.