What Is a General Fund?

Patrick Roland
Patrick Roland
Payroll funds are taken from the general fund.
Payroll funds are taken from the general fund.

A general fund is a financial term referring to a nonprofit entity's financial pool of resources. This term traditionally refers to a fund used by a government or university, because for-profit businesses use a general ledger to monitor finances. From a general fund, all operating expenses, services and employee payrolls are provided. The money for this fund comes from several sources, depending on the institution.

When politicians and school officials talk about balancing a budget, they are referring to the general fund. It encompasses a surplus of money used to operate. In most cases, there are yearly votes taken to determine exactly how the fund is to be spent. In government, especially, this is a source of much debate.

A government's fund attempts to finance all the services necessary for its citizens. Health and human services, education, the justice department, public safety and the government's general operating costs are among the main focuses for a government. Things such as community development, transportation and having a chunk saved for disasters are other, smaller operating accounts of a governmental budget.

A university or school has a completely different set of contents making up its general fund. These institutions often spend the bulk of their finances on housing, property loans, maintenance and administrative costs for teachers and staff members. Universities also must set aside money for groundskeeping, health and human services as well as keeping a general savings fund.

The money that makes up the fund comes from a diverse array of locations for governments and universities. The bulk of a governmental fund is drawn from taxes. No matter if it is a state, local or national government, taxpayers are primarily the people helping fund services and operation. Beyond taxes, a government makes other income from having a surplus from the previous fund, from interest on investments and from charging fees, such as entry fees into parks.

A school derives its income primarily from tuition. When students pay tuition, that money is sent to the general fund and then divided into the many areas of need. Governments also contribute to schools' general funds, especially if the school is run by the government. Donations from organizations and alumni are another source of income, as are fees for things such as entry into sporting events.

General funds are a necessary element of many organizations. By taking in revenue from a variety of sources, governments and schools determine their yearly budgets. These funds are divided among many different needs in order to continue operation.

Discussion Comments


@Perdido - All the tuition hikes over the years may be helping out with that, too! I just had to pay a scary amount for my daughter’s tuition, and it is thousands of dollars more than what I paid for my son’s tuition ten years ago.

Then, there’s the fact that college football attracts thousands of visitors to every game. Tickets are not cheap, and imagine how many of them are sold for every event!

I don’t think that universities are in as much danger as state and federal government is when it comes to a huge decrease in the general fund. That’s a sad fact.


I am always amazed at how well my local university seems to be faring. With cuts in government funding, they still have somehow managed to maintain a beautiful campus.

I suppose that alumni and philanthropists have a lot to do with this. Their donations probably keep the university from losing out in many areas.

The campus always has seasonal flowers growing in neat arrangements. Workers come out and plant new ones as the old ones die off, and I know that if the university’s general fund were low, landscaping would be one of the first things to go.


@cloudel - I’m not sure where the money goes, but I do know that one of my favorite state parks recently had to make some cutbacks due to a shortage in the general fund. I don’t know whether this was because not as many people have been visiting the park due to high gas prices or because the state’s overall fund is low.

I would think that actually more people would be trying to get out and enjoy local parks as opposed to taking faraway vacations in this case, though. It sure is less expensive to take your kids to the park than to the ocean.

My state park decided to stop having workers mow several areas, because those areas received less traffic, and they had to make cuts somewhere. I think even a few park rangers lost their jobs.

Because the areas won’t be maintained, they have been closed off to the public. I am worried that if the general fund keeps decreasing, the whole park may close.


How neat! I didn’t know that every time I paid to get into a local park, I was donating money to my state’s general fund.

I always assumed all of those fees went toward maintaining the park. Although, I suppose this could be one sector of the general fund. The state would have to pay someone to mow the grass, empty the trash, and clean the toilets, as well as pay rangers to keep order in the place.

Well, wherever the money goes, I’m happy to donate it. I really love swimming in the lake and hiking the trails, and $2 is an awfully small price to pay for a whole day of enjoyment. I’d like to think that my money is going toward the park’s general fund, though.

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    • Payroll funds are taken from the general fund.
      By: Marzky Ragsac Jr.
      Payroll funds are taken from the general fund.