[James]

Curious how this conversation has aged since May. As a financial advisor, I handle cash spend down for many non-profits and entities that front fund projects. The challenge is that money market rates and CD’s are about to plummet in yield. As soon as the fed announces their drop, all of these rates will drop. Though 3% will be better than a checking account.

I would like to challenge your risk approach. I feel you have a fiduciary responsibility to have that money work harder for the cause. This means you need to seek solutions that get you better returns. All that said, how much are we talking about? Happy to provide more insight.

[Alex]

Your board member is right about earning near zero, but moving operating cash without a policy is risky.
The middle ground here is to move any cash above your immediate flow needs into a money market account that is still accessible. That is a safe first step.
Then build a formal reserve policy. Define what is your working capital and what is your operating reserve. Document your current cycle of six months down to two to three months as your rationale. That turns a good idea into a sustainable, governed strategy.

• This reply was modified 2 weeks, 2 days ago by  Alex.

[Rowena]

Your board member is correct on the interest rate, but the fix isn’t necessarily Vanguard specifically, it’s matching your cash to your cash-flow timeline. Keep 2-3 months of near-term operating cash in your checking/liquid account. Consider shifting the “extra” seasonal cushion (the amount over what you’ll need before revenue picks back up) to an FDIC-insured high-yield savings or money market at your bank. That gets you most of that yield without leaving your operating funds exposed to market or liquidity risk. Before moving anything I’d encourage the board to adopt a short cash/investment policy first (target liquidity levels, approved account types, who can move funds) so this becomes a documented decision rather than an ad hoc one.