The problem
Without a written policy, every board argues about reserves from scratch. Some spend them down. Some hoard them. Neither is a plan. A written policy turns a fight into a quick check against a number you already agreed on.
When to run it
During budget season, or any time the board debates spending reserves. Adopt it before you need it, not in the middle of a shortfall.
The steps
Find your monthly operating cost
Total your operating expenses for the last 12 months. Leave out one-time projects and pass-through money. Divide by 12. The Annual Budget Workbook gives you the totals in one place.
Get the rest of Play 008
- 4 more steps
- The mistakes to avoid
- The financial controls policy template
- The annual budget workbook template
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The Weekly Play. Short enough to read before your next board call.