The document discusses three types of funding cycles for not-for-profit entities: grant-type funding which has few reserves and risk from grantor agencies; business sales operations which operates like a business with its own plan for downturn; and fundraising/foundation funding which relies on events and donations unless highly successful near cities. It also discusses the benefits of operating reserves for not-for-profits, including guaranteed higher aid, no need to borrow, interest income for programs, and cash available for new projects. Finally, it provides practical ideas for building reserves such as raising prices, increasing average sales, fundraising events, and paying cash.

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Part One: Building Your Operating Reserves
Presenter:
MORRIS PEACOCK, CPA
HintonBurdick CPAs and Advisors
Three Types of
Funding Cycles (for Not-
for-Profit Entities)

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1) Grant Type Funding Cycle
 Usually few reserves
 Concentration of risk from grantor
agencies
2) Business Sales Operations
 Operates similar to business
 Charitable purpose
 Own plan for business downturn
Fundraising/Foundation Funding
 Fundraising events and high level
donations and campaigns
 Unless highly successful  volunteers
to survive
 More successful near large cities

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Original Trend:
Cooperating
Associations 
Business Sales
Operations
Merge 
Conservancies
Friends
Groups 
Fundraising
Not-for-Profits?
Can’t make a profit?
Appropriate to have
reserves?
Education is the
key
How operations are
funded
Importance of reserves

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Benefits of Reserves
• Guarantee aid at higher level
• No need to borrow money
• Interest = funding for programs
• Bigger discounts with timely payment
• No interest on big purchases
• Cash available to develop new products
Three components of reserves
 Meet operating needs for six months to
one year
 Cover the difference between year-end
on audited returns and bottom of cash
cycle
 Planned expenditures for next five years
Practical Ideas for
Building Reserves

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Increase price of
proprietary items?
Increase average sales
price by 5%?
 Raise deductibles?
Annual fundraising
event or campaign?
Pay cash?
Work on scope of
sales?
Presented by
The Association of Partners
for Public Lands
In partnership with
Morris Peacock, CPA,
Morris@hintonburdick.com