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.