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Advantages of Using a Capital Projects Fund

What is a Capital Projects Fund?

Capital project funds may be used by government, local government and certain nonprofit organizations when they are undertaking certain types of capital projects. The fund is used to account for the resources employed in capital projects including the construction of new buildings, additions to buildings and certain purchases of equipment. The capital projects fund will be used during the life of a capital project and will be closed at the end of the project. There are rules and restrictions as to the use of funds raised, depending on the source of those funds. The use of the fund helps the organization show that it is complying with the law and increases accountability.

A capital projects fund may often be used in connection with the construction or expansion of school buildings in the US and some schools and higher education institutions have a capital projects fund division that handles the accounting for these projects. US local government bodies also establish capital project funds for important projects. In deciding when to use a capital projects fund, organizations need to keep in mind the advantages of the fund but also the need for accountability and transparency.

Financing of Capital Projects

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