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reserve money

14 years 10 months ago #149974 by FoxMom
Replied by FoxMom on topic RE: reserve money
We have a set amount in our by-laws that should be carried over--- it's 5,000-- this may seem like a lot ot some, but with buyig paper, run an ice cream social the week before school starts, office supplies, and paper products like napkins, cups, coffee and such we have to have some carryover to get us started--
14 years 11 months ago #149828 by Whazzzup with that?
Replied by Whazzzup with that? on topic RE: reserve money
"you can carry over as much money as you want as long as it's being used"

Is that an oxymoron?
14 years 11 months ago #149825 by Whazzzup with that?
Replied by Whazzzup with that? on topic RE: reserve money
As far as 501c3 regs go you can carry over as much money as you want as long as it's being used for the purposes that was stated in the 501c3 application.
14 years 11 months ago #149821 by EvaMDPTO
Replied by EvaMDPTO on topic RE: reserve money
Interesting to see 2/3 say no, don't carry over and the other say it's a good idea to have one year's operating budget in reserve with the caveat that these recs are usually for much bigger non-profit organizations.

Are there any 501c3 regs on how much you can carry over? I thought the idea of non-profit is that you shouldn't have much carry over money, but I don't know much about federal regs on this or if there are any.

Also, in each of these cases, is the General membership made fully aware each year of the CDs and/or reserve balance?

Thanks in advance for any comments.
15 years 1 week ago #149519 by OregonTreasurer
Replied by OregonTreasurer on topic RE: reserve money
We do have a sizable sum in a savings account and have considered putting at least part of it into a CD. Our eventual goal is to have one year's worth of operating costs in savings so that if we ever have an emergency that stops us from fundraising in the fall or something along those lines, we won't be in such dire straights. The money didn't all come from one year's budget and has built up slowly over time.

We were about 1/3 of the way to our budget goal. Then we chose to remove several thousand dollars to assist our school in light of the current economy and the budget cuts announced by the district for next school year.

That is the type of thing that makes a reserve account a sensible thing to have. You never know what types of emergencies may crop up. I've heard horror stories of districts changing policy to not allow catalog fundraising. While yes, you can eventually find alternatives to replace those funds, it probably won't happen in the first year. Which may mean that you can offer very little to your school that year (I know that's what it would mean for us if we didn't have a reserve account).

I read an article recently that stated it was a good idea for non-profits to have a reserve fund equal to two years of their budget in case of emergency or sudden lack of funds and/or quick increase in services needed. While the article was geared toward non-profits that are larger and bring in more dollars that the average parent group, it came across to me as sound advice for us as well.

Our group's view on the whole carrying money over thing is that it's fine as long as the bulk of what we take in each year is spent on our school each year. Our average yearly contribution to our reserve fund is only about 1/30 of our yearly budget in any given year.

In addition to our reserve fund we also carry over around 3k-5k from June to September to fund beginning of the year trainings, the back to school open house in August, school supply scholarships, and other early expenses like our finance manager renewal, printing, stamps, etc. We don't see the take from our fall fundraiser until around the end of October, and by then we've hosted 2-4 events, so that money is imperative for us to function for the 1st couple of months.
15 years 1 week ago #149516 by LUVMYKIDS
Replied by LUVMYKIDS on topic RE: reserve money
The elementary group I was a part of had a CD at one time that was money designated for a playground. We put it there to let it earn some interest(and therefore reduce our fundraising needs) while we waited for school construction to be completed. The CD was then deposited in our checking and spent. That being said, I don't think any group should hold large sums of money in reserve, whether it's in checking, savings, or CDs without an express purpose for that money. Carrying over a couple thousand dollars to cover start of year expenses is very necessary for most groups, but otherwise money raised should be spent in the year it was raised if at all possible.

Here are thoughts on spending that money:

Some years our group had particularly successful fundraising programs, so we had excess monies. We had the principal, teachers, and office staff give us a wish list of items needed in the school. We started making purchases from the list and got rid of a big chunk of money. A couple of times we gave our teachers an additional classroom stipend so they could get extra supplies and learning materials.

Hey Rocky, watch me pull a rabbit out of my hat.
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