Background
Heritage Universalist Unitarian Church (HUUC or “the church”) General Fund uses a simple bank checking account for day-to-day operations and routine transactions. Pledge donations, general donations, rent receipts, fund-raising proceeds, and other miscellaneous receipts are deposited into the account. Salaries, utilities, routine maintenance expenses, and other operating expenses are paid from this account, as well as distributions for the “minor” funds, such as the music fund, garden fund, outdoor chapel fund, and others.
Cash balances tend to ebb and flow, with cyclical needs. Occasionally, when bank interest rates are worth the trouble, some funds are set aside in FDIC insured bank savings accounts, fixed maturity certificates of deposit, or a money market account for anticipated budgeted expenses.
The finance committee recommends that a certain level of cash be kept in liquid accounts, and any excess be invested. At its September 14, 2020 meeting, the HUUC Board of Trustees approved the following policy statement for management of our cash-on-hand balance.
Policy statement
Liquid cash retention is calculated on an annual basis upon adoption of the HUUC Annual Budget. A liquid cash target of 15% (+/-3%) of the annual expense budget should be retained in cash reserves, allowing the rest to be invested.
Rationale for policy based on research and historical financial data:
- The Unitarian Universalist Association recommends that a congregation have cash reserves of 6%, so our recommendation is conservative for ease of operations.
- Projected total year pledges at historical 95% realization rate is reliable.
- Anticipated rent and other income are not assumed as necessary revenue streams.
- No adjustment is made for distributions from the “minor” funds, which are typically unplanned expenses.
Posted 9/21/2020.
