Safety net essentials — Now more than ever, you need operating reserves

Description

Abstract: One study of charities found that 57% of the organizations surveyed had insufficient operating reserves to cover three months of expenses — the minimum level many experts consider necessary to maintain financial stability. Forgoing reserves leaves nonprofits vulnerable to rapid or unexpected drops in revenue or jumps in expenses. This article explains why it’s necessary to have sufficient operating reserves, and offers questions a nonprofit should ask itself when trying to determine what is sufficient.