Maintaining Sufficient Reserves to Protect Your Not-For-Profit Organization

For not-for-profit organizations--indeed, for all organizations--maintaining adequate reserves is essential to establishing financial stability. Maintaining insufficient reserves can put an organization at risk, but maintaining excessive reserves can also be problematic. A number of organizations have been criticized for retaining excessive reserves. So what level of reserves should not-for-profit organizations maintain within their net asset balances? This is an age-old question asked by many not-for-profit organizations and their various constituencies. This paper offers some practical guidance to organizations that wrestle with this issue.