building operating reserves
TRANSCRIPT
12/12/2013
1
Part One: Building Your Operating Reserves
Presenter:
MORRIS PEACOCK, CPA HintonBurdick CPAs and Advisors
Three Types of
Funding Cycles (for Not-
for-Profit Entities)
12/12/2013
2
1) Grant Type Funding Cycle
Usually few reserves
Concentration of risk from grantor
agencies
2) Business Sales Operations
Operates similar to business
Charitable purpose
Own plan for business downturn
Fundraising/Foundation Funding
Fundraising events and high level
donations and campaigns
Unless highly successful volunteers
to survive
More successful near large cities
12/12/2013
3
Original Trend:
Cooperating Associations Business Sales
Operations
Merge Conservancies
Friends Groups
Fundraising
Not-for-Profits?
Can’t make a profit?
Appropriate to have
reserves?
Education is the
key
How operations are
funded
Importance of reserves
12/12/2013
4
Benefits of Reserves
• Guarantee aid at higher level
• No need to borrow money
• Interest = funding for programs
• Bigger discounts with timely payment
• No interest on big purchases
• Cash available to develop new products
Three components of reserves
Meet operating needs for six months to
one year
Cover the difference between year-end
on audited returns and bottom of cash
cycle
Planned expenditures for next five years
Practical Ideas for
Building Reserves
12/12/2013
5
Increase price of
proprietary items?
Increase average sales
price by 5%?
Raise deductibles?
Annual fundraising
event or campaign?
Pay cash?
Work on scope of
sales?
Presented by
The Association of Partners
for Public Lands
In partnership with
Morris Peacock, CPA,