In the United States, a permanent fund is one of the five fund types established by GAAP. It is classified as a restricted true endowment fund for governments and non-profit organizations. Put simply, a permanent fund may be used to generate and disperse money to those entitled to receive payments by qualification or agreement, as in the case of Alaska citizens or residents that satisfy the rules for payment from their permanent fund from State oil revenues. It was first introduced through GASB Statement 34. The name of the fund comes from the purpose of the fund: a sum of equity used to permanently generate payments to maintain some financial obligation. Also, a fund can only be classified as a permanent fund if the money is used to report the status of a restricted financial resource. The resource is restricted in the sense that only earnings from the resource are used and not the principal. For example, a fund can be classified as a permanent fund if it is being used to pay for accounting services for a perpetual endowment of a government-run cemetery or financial endowments towards a government-run library.
A common misconception is that permanent funds are required for special-purpose government entities that solely engage in business-type activities. However, this is not the case. According to Statement 34, that special-purpose government entity needs only to report the net balance of the restricted resources.
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Famous quotes containing the words permanent and/or fund:
“During these fits of absolute unconsciousness I drank, God only knows how often or how much. As a matter of course, my enemies referred the insanity to the drink rather than the drink to the insanity. I had indeed, nearly abandoned all hope of a permanent cure when I found one in the death of my wife.”
—Edgar Allan Poe (1809–1849)
“School success is not predicted by a child’s fund of facts or a precocious ability to read as much as by emotional and social measures; being self-assured and interested: knowing what kind of behavior is expected and how to rein in the impulse to misbehave; being able to wait, to follow directions, and to turn to teachers for help; and expressing needs while getting along with other children.”
—Daniel Goleman (20th century)