What type of fund is used for resources restricted to specific purposes by donors or grants?

The special revenue fund is designated specifically for resources that are restricted by donors or grants for particular purposes. This type of fund is commonly utilized by governmental entities to manage money that must be used for specific programs or projects, such as environmental protection initiatives, public health programs, or specific infrastructure projects, as directed by the donors or grantors.

In governmental accounting, the special revenue fund ensures that these resources are tracked separately from the general fund, allowing for transparency and accountability in how those funds are being utilized. This is crucial for meeting compliance requirements and maintaining trust with stakeholders who expect their contributions to be used for the intended purposes.

Other types of funds, while they also serve specific functions, do not align with the definition of managing restricted resources in the same manner. For example, a capital project fund is aimed at financing the acquisition or construction of significant capital assets, while a permanent fund focuses on resources preserved to provide a flow of income in perpetuity. Custodial funds are used for resources held for others, but they do not involve restrictions imposed by donors for specific activities or projects. Thus, the special revenue fund is the appropriate choice for handling resources specifically restricted by donor intentions.