Operating Reserves as a Key Indicator of Financial Health
Course Description:
An adequate operating reserve is one of the most critical indicators of a nonprofit organization’s financial health, resilience, and sustainability. This session provides a practical, in-depth guide to understanding, establishing, and managing an effective operating reserve policy. Participants will learn how to determine the appropriate reserve target based on their organization’s unique risk profile and operational needs. We will cover the mechanics of calculating the reserve, best practices for policy documentation, and effective strategies for communicating the purpose and status of the reserve to the board, staff, and external stakeholders. Ultimately, this course will equip leaders with the tools to leverage their operating reserve as a strategic financial asset, ensuring the organization can navigate unforeseen challenges and maintain continuous service delivery.
Learning Objectives:
Define what an operating reserve is.
Explain why an operating reserve is considered a key metric for assessing a nonprofit’s financial strength and long-term sustainability.
Outline the essential components of a formal, board-approved operating reserve policy, including funding, use, and replenishment guidelines.
Describe strategies for clearly communicating the operating reserve policy and its financial status to the board of directors and other internal and external audiences.
Operating Reserves as a Key Indicator of Financial Health (NASBA/CAE/CPE Course Credit Information)
As a CAE Approved Provider educational program related to the CAE exam content outline, this program may be applied for CAE credits toward your CAE application or renewal of professional development requirements.
U.S Transactions Corp. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.
In accordance with the standards of the National Registry of CPE Sponsors, CPE credits have been granted based on a 50-minute hour.
(National Registry Sponsor Nr: 138278)
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