1. Benchmarking Dashboard May 2013 Nonprofit Reserves If prompted, click “Enable Content” and say to the pop- up that you would like to make this a trusted document To use the dashboard on slide 5, this PowerPoint must be viewed as a Slide Show by selecting the podium icon in the lower right-hand corner of your screen If help is needed, please contact lmalone@tatetryon.com When opening this file…

2. How much should your organization have in reserves? Reserves increase a nonprofit’s ability to respond to changes in the environment, protect against unforeseen risks, and make investments into new ventures. The advisable level of reserves depends on a number of factors, but benchmarking your reserves against those of similar organizations can help you know where you stand.

3. This dashboard includes tax year 2010 and 2011 data In this study, reserves are defined as unrestricted net assets less fixed and intangible assets. We also provide benchmarking on net assets, unrestricted net assets, and two key ratios: Reserves as a percent of total expenses Investments* as a percent of reserves The dashboard contains Form 990 data for several hundred organizations that hold one of two common types of IRS exempt classifications: (c)(3) organizations (c)(6) organizations *Investments in publicly traded securities.

4. How to use the dashboard on the next slide The dashboard includes two data filters that allow you to “cut” the data by both IRS code and organizational revenue size. You may filter the data using the drop-down menus in the upper left-hand corner of the dashboard. The dashboard also has two different tabs, or pages, which can be selected by clicking on the tabs in the upper right-hand corner of the dashboard. Each tab includes the IRS code and revenue size data filters. Two data filters Two pages

6. Dashboard not working?  If you receive security warnings, always say enable content/that you trust the content.  If slide 5 appears blank, check that you are viewing the PowerPoint in Slide Show Mode.  If you receive the following message when you open the slide deck, you need to upgrade your version of Adobe Flash Player: “Some controls on this presentation cannot be activated. They might not be registered on this computer.” To upgrade Adobe Flash Player, install the latest version from www.adobe.com. Note: This slide deck must be saved only in a PowerPoint 97-2003 format. If you have Microsoft Office 2007, do not save this presentation in a pptx format. If you continue to experience problems, please send an email to lmalone@tatetryon.com or call (202) 419-5191.

7. How do you compare? For all nonprofits included in the study, median reserves as a percent of total expenses is 48.6% 89% have positive reserves 11% have negative reserves Median reserves as a percent of total expenses for (c)(3) organizations is 52.7% 90% have positive reserves 10% have negative reserves Median reserves as a percent of total expenses for (c)(6) organizations is 43.3% 88% have positive reserves 12% have negative reserves

8. How do you compare? (Cont’d) For all nonprofits included in the study, median investments as a percent of reserves is 102.7% Investments expressed as a percent of reserves show the degree to which reserves are invested in publicly traded securities Median investments as a percent of reserves for (c)(3) organizations is 104.9% The median ratio for (c)(3)s often exceeds 100%, likely because (c)(3) investment portfolios usually include restricted net assets Median investments as a percent of reserves for (c)(6) organizations is 94.7%

9. Case Study: National Association of Counties (NACo) In the early 1990s, NACo was effectively bankrupt. As part of its recovery, NACo developed a budget policy mandating that 3% of budget surplus be set aside annually for reserves. The reserves target was set to 45% of revenues, and anything above this amount would go to a board designated building fund The target reserves amount was established based on what would be sufficient to sustain NACo for 1-2 years assuming zero earned revenue (worst case scenario) The reserves are invested and the investment returns are not included in the operating budget, which allows the reserves to grow “Our reserves policy provides a bridge to sustainability. [The need for reserves] is intuitive, but it’s important to ensure understanding of what the reserves are trying to accomplish.” David Keen Chief Financial Officer NACo revisits its reserve policy periodically and has relaxed the 3% policy. Its total reserves are now above 100% annual revenue, making NACo well prepared for a catastrophe. For example, should the federal government consider a law to abolish county government, NACo’s board would be able to immediately assemble a campaign NACo refers to its reserves policy and benchmarking studies whenever a board member questions the size and purpose of NACo’s reserves

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