Nonprofit organizations need to build and maintain sufficient reserves, as a subset of available, unrestricted net assets, to provide a cushion to offset potential deficits and safeguard against unforeseen events. Having insufficient reserves can put an organization at risk while having excess reserves can also be of concern.
To start, how do you, as a nonprofit financial manager, determine what is the right level of reserves for your organization? What goals should your board set and what strategies should you follow in building, segregating, investing, and classifying reserves? What types of reserves should your organization consider? There is no one-size-fits-all approach; each organization has unique characteristics in terms of liquidity, growth, risk, the nature of operations, level of existing unrestricted net assets, etc.
These are just some of the questions that will be addressed in our upcoming presentation by Jennifer Olivier, Signing Director, and Melissa Murphy, Manager, from CLA. Jen and Melissa will share some basic concepts and best practice guidelines related to reserves as well as more in-depth considerations for those of you wanting to take your reserves strategy to the next level.
Presenters: CliftonLarsonAllen (CPAs)
Jennifer Olivier, Signing Director, and Melissa Murphy, Manager, from CLA