We’ve all heard how important it is to put some money away for a rainy day – and this practice is especially important for non-profit organizations. In the nonprofit world, this type of rainy day fund is called an operating reserve and it can help sustain the organization when times get tough.
Ben Antonelli, a principal on our assurance team, works closely with the not-for-profit industry on a variety of projects. He is oftentimes pulled in to consult on topics related to operating reserves, financial reporting, and internal controls. In this episode, Ben talks about the importance of this type of fund and how he helps nonprofits establish their safety net.
Why do you need an operating reserve?
“It’s a budgeting function, a risk assessment function, and a lot of strategic planning.” However, if the freedom and safety of a rainy day fund don’t entice you, something else might: regulation! There’s a new financial reporting standard specific to nonprofits coming that will require organizations to essentially disclose their operating reserve.
If you work within or with a nonprofit organization, you will be interested in these other topics discussed in this episode:
- How does one calculate the size of an operating reserve? You can also read Ben’s blog post for more on this: “Does Your Nonprofit’s Operating Reserve Balance Stack Up?”
- Common mistakes that you can avoid.
- Ben’s best practices and tips for establishing your safety net.
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articles & insight
Does Your Nonprofit’s Operating Reserve Balance Stack Up? – Analyzing your organization’s operating reserve balance at any point in time is absolutely critical in understanding its ability to manage cash flows on a day-to-day basis. Read on to learn more.
Setting The Bar Higher – When it comes to establishing and maintaining governance for a nonprofit, the board of directors is expected to adhere to high expectations. Read on to learn why.
Start Asking All The Right Questions – When you are better able to articulate the organization’s vision for the future, donors (individual and corporate) are more likely to throw their support behind your nonprofit and the initiatives you are looking to accomplish in the years ahead.
Weathering Change – What are you doing to predict change and mitigate risks at your organization? Read on for some ideas.
official transcript
Click here to read the official transcript for episode 154, “the freedom of a rainy day fund”