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Thanks so much for the opporunity to participate in this forum. I work for an Arts organization with a $5 million budget. We were closed for 14 months during the pandemic, opening “outside only” for limited days and times for 7 of those 14 months. We did not use our reserves during the pandemic. Right after we closed our doors middle of March 2020, we drew on our LOC, not knowing what we would need, and concerned that as our financial position worsen we might no longer be able to draw on this line. Great decision! We also asked donors if we could unrestrict funds – across the board they were generous and allowed us to do this.
Federal funding was also enormously helpful during the pandemic.Questions:
1) We have designated working capital of 90 days (based on budgeted daily cash expenses) and additionally operating reserves. Our building belongs to the City, so we don’t have large capital expenditures to maintain it. How should organizations hold reserves? In money market accounts, CD’s, short-term bonds? This can be a large amount of money that declines in value.2) Budgeting with our eye on maintaining a surplus to continue to build reserves is difficult. What is normal earned revenue? What can we expect from our donors? How do we pay employees enought to hire and retain them and keep up with inflation? How can we prepare for a possible recession looming and Americans predicted to have less money in 2023 for discrenary spending?
Looking forward to the webinar.