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Maintaining Safe Levels of Cash Reserves
How much is enough?

Question:
In these unpredictable economic times, what is the recommended amount of liquid reserves a church should keep on hand (% of budget)?

Answer:
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.

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Posted:
August 26, 2009
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