Four Good Questions for Churches about Cash Reserves
Four Good Questions for Churches about Cash Reserves
Keeping funds handy to deal with unexpected surprises.

Editor's Note: We frequently field questions from churches about cash reserves. A general rule of thumb is for churches to maintain a minimum of three months of cash on hand related to expenses. We recently asked Michael Batts, an Editorial Advisor for ChurchLawAndTax.com and the managing partner for Batts Morrison Wales & Lee, a national CPA firm serving nonprofits and churches, about adequate levels of cash reserves, plus a couple of questions about demonstrating the need for reserves to senior church leadership.

Is it a good idea to have cash reserves?

Generally, yes. Part of good stewardship is planning for the future. Consider the story of Joseph and planning for the famine. And consider that Malachi describes bringing the tithes into the "storehouse."

From an operational perspective, maintaining reasonable cash reserves represents good stewardship by allowing a church to be prepared for contingencies, such as unexpected large repair bills, a sudden and unexpected downturn in revenues, or other unexpected events. For a church with outstanding debt, cash reserves can be critically important in the event of significant unexpected expenses or revenue downturns.

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Posted: January 8, 2014
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