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Pandemic Forces Associations to Rethink Their Reserve Strategies

Staying financially afloat remains challenging for many organizations

From the moment the pandemic began forcing closures and cancellations, associations have been worried about how to stay financially afloat. However, two experts say the past year has provided new insights on how to tackle reserves and generate revenue.

Erin Fuller, MPA, FASAE, CAE, president of association solutions at MCI USA, said the traditional rule for reserves is to keep six months of operating expenses.  However, during recent webinar “The Business of Associations: Replenishing, Growing and Leveraging Your Reserves,” Fuller said the pandemic has upended this thinking. In the future, she thinks calculating reserves will be more nuanced and factor in how the association generates revenue.

“I actually serve on the board of a trade organization where we are looking at a goal of 12 to 18 months [of budget] as our new goal for reserve funding, in light of what is happening in the pandemic, in light of the fact that our group traditionally has used in-person events for a lot of revenue growth,” Fuller said. “I think that, in general, assessing reserve goals for associations and nonprofits is now going to be a much more dynamic process, based on the actual business model rather than a template or a rule of thumb.”

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