We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Fund Balance?

Mary McMahon
Updated: May 16, 2024

A fund balance is the net worth of a fund at any given point in time, found by calculating the assets and subtracting the liabilities. This can be particularly important in fund accounting, an approach where an organization creates a fund for a designated purpose to make the use of monies transparent and comply with legal mandates. Government agencies and academic institutions both do this for activities like paying for scholarships and public works projects.

Assets in a fund can include deposits as well as existing holdings. Liabilities involve expenses and withdrawals. In fund accounting, accountants should be able to show how money enters and leaves the fund, providing documentation to show how it was used. In a simple example, a university may have a fund for student events. At the beginning of the semester, student organizations pay into the fund to charge it up, and a series of disbursements are made as the semester progresses to fund activities, paying for things like speakers, transportation, food, and so forth.

In some forms of fund accounting, the end fund balance should be zero. This shows that the fund paid for itself and that all disbursements were related to the fund. If funds are left over, this indicates excessive payments into the fund, or a failure to completely disburse everything. If the fund has to borrow money, not enough funds are going into it, or it is not being used appropriately. A yearly scholarship fund, for example, should end with a net balance of zero.

Calculating fund balance is usually relatively easy to do. It is necessary to have access to the books to see assets and liabilities that may not have been recorded yet. For example, a fund could contain investments due for a dividend payout, and this would increase the fund balance. Likewise, there could be outstanding checks drawn on the fund that haven't cleared yet. In addition to adding assets and liabilities, it is also possible to audit the movement of funds, checking for issues like unauthorized disbursements.

In the case of public organizations, public disclosures about funds must be made available. Anyone can review the books and accounting information and can request a current fund balance and statement of account. This facilitates transparency, making organizations aware that members of the public will be able to see any questionable activity. If fund activity includes legal violations like not maintaining a required minimum balance, interested parties can bring suit to force the organization into regulatory compliance.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.