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Part One: Building Your Operating Reserves

Presenter:

MORRIS PEACOCK, CPA HintonBurdick CPAs and Advisors

Three Types of

Funding Cycles (for Not-

for-Profit Entities)

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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

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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

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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

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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,

Morris@hintonburdick.com