Capital vs. operational funds
Capital funds and operational funds are two distinct categories of financial resources used by organizations, businesses, and governments to manage their finances and meet their objectives. Each fund has rules about how money can be spent, broken down below.
Capital funds are typically earmarked for long-term investments and expenditures that are expected to benefit an organization over an extended period. These funds are used to acquire or improve assets, such as buildings, equipment, infrastructure, or other long-term investments that will enhance the organization's capacity or capabilities. The projects or investments funded by capital have a longer lifespan and provide benefits over several years or even decades. These funds are not intended to be fully expended within a single fiscal year.
Operational funds, on the other hand, are used for day-to-day expenses and the ongoing operations of an organization. These funds cover expenses like salaries, utilities, rent, supplies, and other routine costs necessary to maintain the organization's regular functions. These funds are used for short-term needs and are typically spent within the current fiscal year. They are replenished regularly to ensure the organization can continue its day-to-day operations.
In summary, capital funds are intended for long-term investments and asset acquisition, while operational funds are used for ongoing operational expenses.
FALSE — VCU’s capital expenditures are designated funds, and must be used for capital projects, meaning none of this funding can be used for other expenses like operational funds.
Capital expenditures are designated, meaning they are set aside for a specific purpose, such as the construction or renovation of facilities, acquisition of major equipment, or infrastructure development.
Note: VCU also receives funding from VCU Health System as described in Hospital Services but any other VCUHS resources are not available to the university for operating needs.
Capital funding
The university receives several types of funding from the Commonwealth for capital projects:
- 50% to 100% of instructional buildings
- 50% (approximately) of research buildings
- Various allocations for maintenance reserve to fund maintenance and repairs on our existing buildings.
In recent years VCU has received over $440M in capital funding from the Commonwealth:
- $14.7M – Acquisition support of the ABC property to be used for the Athletic Village
- $18.5M – Technology Operations Center equipment
- $124.5M – STEM Building
- $51.6M ($100.6M total project) – College of Engineering Research Building
- $232.5M ($253.1M) – Arts and Innovation Building (AIAB)
This funding helps VCU to avoid issuing debt to finance the facilities.