[khull]

We set ours at 3 months of expenses. Each year when our budget increase, we set aside an additional amount to get our reserve back up to that 3 month mark. We’ve discussed moving it up to 6 months, but with a budget of $4M our finance committee determined they didn’t feel comfortable having that much cash sitting around unused and not going towards our mission.

Here’s our policy:
The organization aims to hold a reserve fund equal to three months of budgeted operating expenses. The amount of the reserve fund will be calculated each year after approval of the annual budget, and approved by the Board of Directors. The reserve will be funded with surplus unrestricted operating cash and will be held in cash or cash equivalent funds.

The operating reserve is intended to be held as emergency savings for the organization. In the event of a shortfall where reserve funds could be used, the following steps will be followed:
1. The Executive Director, in conjunction with the Sr. Director of Administration, will identify the need for access to reserve funds. In identifying a need, staff should consider the availability of other funds and evaluation of the time period the funds will be used and replenished.
2. The request to use reserve funds will be discussed and approved by the Finance Committee.
3. The Board of Directors will approve the use of reserve funds.
4. The organization will plan to replenish the funds within one year, and will report quarterly to the board on progress with repayment.

[khull]

In the past, our annual salary increases have been tied to the federal COLA, with additional market increases for roles that were out of line with external benchmarks. We are trying to plan for inflation in the next calendar year and while giving the full COLA to staff is a top priority, we’re not certain we’re going to be in a financial position to be able to do that. We are having discussions with funders right now to see which may be open to increasing their grants to help us keep track with inflation.

In the meantime, we have given a $1,000 cost of living “bonus” to all staff mid year. This felt more equitable than giving a percentage raise or bonus, as we know our lowest paid staff are the ones who are feeling the effects of inflation the most.

It’s interesting that this article noted that the orgs most affected by inflation are those with high direct costs (food banks, etc). It almost assumed that no or low raises would be given. Personnel is our highest cost by far, but we must look at supporting our staff through this period of high inflation and making sure that our wages keep track with the market.

[khull]

This is what we did. We are still planning to have annual raises at the calendar year, but gave everyone a one-time amount of $1,000 to help with their increased costs. We know that inflation is taking a higher bite out of the take home pay of our lower paid staff, so this seemed like a more equitable way to get additional funds into our staff’s hands.