Washington, DC – Most nonprofits don’t have the financial reserves needed to weather the current economic crisis, according to a new report released by the Urban Institute and funded by the Eugene and Agnes E. Meyer Foundation in Washington, DC. The study, the first of its kind, examined the operating reserves of more than 2,500 nonprofits in the Greater Washington area, ranging in mission from soup kitchens and job training centers to schools and local arts groups.
Operating reserves—cash and other liquid assets without donor restrictions that can be tapped when income falls short of expenses—are an important indicator of an organization’s financial health and its ability to survive challenging times. The study reviewed financial data for Greater Washington’s locally-focused nonprofits over a six-year period from 2000 to 2006.
Among the report’s key findings:
The Meyer Foundation provided funding for the report as part of its longstanding commitment to helping grantees strengthen their financial management. Since 1995, the Foundation’s loan program has assisted grantees experiencing short-term cash flow problems. “Meyer regularly works with grantees to help stabilize their finances,” says Rick Moyers, the foundation’s director of programs. “Adequate operating reserves are essential for any nonprofit organization even in good economic times, but are crucial in the current economic environment.”
For a copy of the Washington Area Nonprofit Operating Reserves report, visit www.meyerfoundation.org/reserves. To speak with Thomas Pollak, one of the authors of the report, contact Stu Kantor at the Urban Institute at 202-261-5283; to interview Rick Moyers about nonprofit operating reserves, contact Amy Harbison at the Meyer Foundation at 202-552-7470.