3. Reserve Fund

The reserve fund comprises all current assets of the church that are not otherwise specifically allocated to cover current liabilities, restricted assets (see Special Funds below), endowment funds, and current net income. Currently the reserve funds are included in inventory held for sale, money invested in account #1502 (currently FMS Bonds), and the unrestricted bank accounts. The reserve fund serves several purposes:

  1. It contains the accumulated net income of the church from previous years.
  2. It covers deficits in the operating fund and it receives end-of-year surpluses.

iii. It helps manage our cash flow by protecting our checking account from overdrafts.

  1. It funds the purchase of inventory, which is sold at a profit to provide additional income to the operating fund.
  2. It supplies money for expenses approved by the board of trustees, which are not part of the annual budget. Necessary repairs and maintenance serve as examples. In other words, the reserve fund serves as an “emergency fund”.

It is a policy of the Board of Trustees that the balance in the reserve fund be no less than 10% of the current year’s operating budget. The balance of the reserve fund is managed by the finance ministry team and may be invested in mutual funds, CD’s and/or bonds as the team sees fit.

Updated on September 12, 2018

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