Which fund is set up for donations made to benefit individuals or organizations, where the principal may be expendable or not?

The correct choice is a Private-purpose Fund, which is specifically established to manage resources that are intended for the benefit of individuals or specific organizations. These funds can be created to support a wide array of purposes, such as scholarships, grants, or assistance for those in need.

The distinguishing feature of a Private-purpose Fund is its flexibility regarding the principal. In some instances, the principal of the fund may be expendable, meaning that the original donations can be utilized for purposes as determined by the fund’s specifications, providing immediate benefits to the beneficiaries. Alternatively, if the principal is non-expendable, it must be maintained intact while only the earnings or interest generated from that principal can be spent for the designated purposes.

In contrast, a Permanent Fund is dedicated to preserving the principal, with only the income being spent, typically for public purposes. A Special Revenue Fund is used specifically for tracking resources that are restricted to spending for particular purposes but does not typically involve donations or funds for private individuals or organizations. A General Fund is the primary operating fund for a governmental entity and handles all financial transactions that are not accounted for in other funds. This context defines why the Private-purpose Fund is the most appropriate classification for the situation presented in the question.