Not-for-Profit Reserve Levels: How Much Is Enough?

Not-for-profit organizations are grappling with a long-standing question: How much of their assets should they hold as operating reserves? The answer depends on a number of factors, including the sophistication of an organization’s accounting systems, as well as the timing of receipts and disbursements. Developing a formal reserve policy can help not-for-profit management and board members focus on this important issue and make decisions that are appropriate for their organization.