Talking about Cash Reserves

by Jac La Tour, ECCU Communications Manager
(Originally published as a post within ECCU’s former e-publication, The Buzz.)

Our ministry development officers (MDOs) have been talking with quite a few ministries lately about cash reserves. Each ministry’s story is different, but many are adjusting their budgets because of the economy’s impact on giving. You might resonate with some of these conversations.

MDO Schuyler Francine (he goes by “Sky”) says that many of the people he’s talked with in Orange and Los Angeles Counties know that their ministries need more liquidity but they struggle with knowing how much. MDOs are equipped with a tool designed to help ministries evaluate their reserves and calculate a reasonable target balance, and Sky says the people in charge of day-to-day finances seem to appreciate the help we can provide in facilitating these types of discussions.

Some conversations gravitate toward the need to set aside reserves for maintenance and replacement of capital items like roofs, carpeting, and parking lots. One pastor told Sky, “No one is excited to give to a ‘new concrete for the parking lot’ fund.” But those funds have to be available when you need them. So Sky was able to walk the pastor through a replacement reserve tool we’ve developed to help ministries prepare for those kinds of expenses.

In the Bay Area, MDO Bob Dye has been helping one ministry evaluate their overall financial health. Turns out they’ve been using reserves to cover shortfalls in giving for the past two years. As a result, their reserves are down more than 35 percent. Fortunately, they still have some reserves, but they’re asking at what point the run-off would threaten their overall financial health. Again, the cash reserves assessment tool is helping Bob give them some guidance.

As I hear about these cash reserves conversations, a simple theme seems to be emerging. It’s that while ministry staff value the financial services a bank provides, they most appreciate being able to sit down with someone they know who understands ministry and can talk about the challenges of managing ministry finances, especially in today’s economic climate.

Have you been talking about cash reserves lately? Do you have an observation, question, or opinion? If so, please send it in an e-mail. Maybe we can keep this conversation going in future issues of The Buzz.

If you found this article to be helpful, please pass it along to your peers and other members of your ministry team using our tool.

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