In these unpredictable economic times, what is the recommended amount of liquid reserves a church should keep on hand (% of budget)?
Churches are looking at and using their reserves more now than they have in the past. In the book, "Essential Guide to Church Finance," we recommend a reserve balance of three months. This is to help in times such as these when you may be seeing a larger need for expenses (benevolence, etc) and a smaller contribution base than in prior years. Each church governing board should determine a reserve level and management should work on a plan to reach that amount. The reserve requirement should be reviewed periodically to make sure it is adequate for the ever-changing needs of the church.
It is typical for a church to only have 3-4 weeks of liquid reserves. Keep in mind that things can happen to cancel a weekend of services such as a tornado, a blizzard, or some other event. When that happens, you need to be able to carry on without concerns.