With our recent brand change, our website will have a new look with enhanced user experience. Changes will roll out in phases to minimize any impact. Thanks for your understanding and stay tuned!

With Cash Reserves, One Size Does Not Fit All!

by Jac La Tour

cash reserves not all the same

January 23, 2015

I’m sort of a hat snob. To me, fitted hats are much cooler than the one-size-fits-all kind, even the elastic ones like I got at a golf tournament last year. At first I thought, “Hey, this is pretty comfortable.” But by the fifth hole, it felt like a cranial tourniquet.

In ministry, one size definitely doesn’t fit all when it comes to how much a ministry should have in cash reserves. Parachurch ministries and Christian schools have dramatically different financial operations and therefore different liquidity needs. Calculating the necessary reserves for your ministry isn’t rocket science, but it takes some work.

Before starting that work, it helps to have an idea of what’s appropriate for your ministry type. Here are some ballpark numbers to get your team talking.

Your Ministry Type: Cash Reserves to cover Expenses for:
Church 60 to 90 days
Parachurch 90 to 180 days
Christian School 90 to 120 days

Why the differences? There are a lot of reasons. One is the proximity of your donors to your ministry. Church members, for example, are close and therefore easier to communicate with than donors who are spread all over the country. This means church members are more likely to respond quickly if an urgent financial need arises.  

See, cash reserves are like hats. One size doesn’t fit all ministries. You can learn more about why and how to build your ministry’s reserves from ECCU’s white paper Cash Reserves: How much is enough?

Category: Ministry Matters