How Fundraising Managers Can Protect Reserves as Assets

• Mission and long-term plans or strategies
• Type of organization — higher education, religious, social services, museum, cultural, association, foundation or other
• Corporate structure — sole entity, parent/subsidiary entities, brother/sister entities, loosely affiliated groups, etc.
• Investment in the physical plant — the facilities owned and/or leased
• Complexities of the debt structure
• Current and future commitments
• Funding sources, including fundraising activities
• Types of programs provided
• Self-insurance
• Workforce compensation and benefits issues

A “prudent-person” measurement should be considered in assessing the appropriateness of reserves: Would a prudent person, exercising due care and proper stewardship over the organization’s resources, set aside such a level of reserves? The organization also should use an independent and competent board of directors or advisory committee as a safe harbor in determining whether the prudent-person rule has been followed.