Restricted vs. Unrestricted Charitable Gifts in Canadian Wills

When leaving a charitable bequest, donors often want to direct funds to a specific cause — cancer research, the building fund, scholarships in a family name. These restricted gifts are legitimate and common, but they come with tradeoffs that donors should understand before specifying restrictions.

Unrestricted gifts — charity-preferred, donor-trust #

Unrestricted bequests give the charity full discretion. Most major Canadian charities specifically request unrestricted gifts because:

• Operating expenses (rent, salaries, technology) need consistent funding
• Charities can respond to changing needs and priorities
• Administrative overhead is lower
• The charity's board can apply funds where most needed

For donors who trust the charity's judgment, unrestricted gifts maximize the gift's impact. The donor's role is to choose a charity whose mission aligns with the donor's values; the charity then deploys funds effectively.

Restricted gifts — donor-control, risk of obsolescence #

Restricted bequests direct funds to a specific purpose. Common patterns:

• Research-specific (e.g., cancer research, dementia research)
• Program-specific (youth services, music ministry, scholarship)
• Capital-specific (building fund, endowment principal)
• Memorial (named scholarship or program in the donor's memory)

Restrictions give the donor more control over how funds are used. The tradeoffs:

• The specific purpose may become obsolete (program discontinued, building sold, research focus shifted)
• Charity administrative cost is higher
• If purpose becomes impossible, court proceedings may be required to vary the restriction (cy-près)
• Charities may decline very restrictive gifts that don't align with current strategy

The flexible-restriction compromise #

The most common modern approach is flexible restrictions:

"I give to [Charity] the sum of $[Amount] for [specific purpose]. If [the charity's] trustees determine at any time that the specified purpose is no longer practical or appropriate, they may apply the funds to such other purpose as the trustees determine to be closely related to my original intent."

This allows the charity to:

• Honour the donor's intent while the purpose is practical
• Adapt to changing circumstances without court intervention
• Apply funds to closely-related purposes if the original becomes impossible

Most planned-giving offices at Canadian charities can help draft restriction language that balances donor intent with practical flexibility.

When to use which approach #

Unrestricted gift if:

• You trust the charity to deploy funds well
• You want maximum simplicity
• The gift is relatively small ($1,000-$10,000 typically)
• You don't have specific use preferences

Restricted gift if:

• You have specific values about how the gift should be used
• You're leaving a substantial gift ($25,000+) and want to direct it
• You're creating a memorial program or scholarship
• The restriction aligns with the charity's current strategy

Flexible restriction (recommended for most restricted gifts):

• Combines donor intent with practical adaptability
• Reduces administrative complexity
• Common in modern planned giving

Endowed vs. expendable #

A separate dimension — should the charity spend the principal or keep it as endowment?

Expendable gift — the charity can spend the full amount as appropriate. Most bequests are expendable by default.

Endowed gift — the charity preserves the principal (invested) and uses only the annual investment income. Generates ongoing support but requires substantial principal (typically $25,000+ for the income to be meaningful).

For endowment-style gifts, see our setting up an endowment guide.

What we focus on at It's Simple Will #

The will questionnaire supports both restricted and unrestricted bequests, with prompting around restriction language.

Related guides #

• Charitable bequest formats
• Setting up an endowment through your will
• How to choose a charity for your will