Lori--
A few years ago Charlie Trautman (executive director of Sciencenter in Ithaca, N.Y.) was running an ASTC session on museum finances. He gave a very good explanation of why institutions should have reserves, and some ideas for how they could go about building them.
In a room with about 60 science-center staff people, I think only five worked at museums that had more than six months of their annual budget in reserve for emergencies. Perhaps my memory is inaccurate, but I think the "standard" in that room was something along the order of one month's budget amount set aside. Probably not a standard to aim for! I remember lots of people vowing to start building a reserve fund equal to one year's budget.
In the world of personal finance, we are all the time advised to have three to six months' salary in the bank (readily liquid) before we do any investing, major purchases, tuition payments, vacations, etc. It's the "just in case" money, and they alway say that it must come first.
Perhaps your county (Charlotte?) has the equivalent and just calls it something else. What do they do if they have an emergency? (Besides raise taxes :-) If your reserves are literally in your cash account, the same place you pay your bills from, maybe they'd feel more comfortable seeing them in a restricted fund of some sort, invested in a money market or something.
Just some morning ramblings, but thanks for bringing up an often overlooked topic, and good luck!
--Todd Happer
Scientific American
On 4/17/01, Lori Tomlinson <[log in to unmask]> wrote:
>Hi listers!
>
>We are a small history museum in Florida. Annually, we apply for
>grant funds
>from our County Government. This year, they have questioned the
>amount of
>cash shown on our Balance Sheet. Our board and staff feel strongly
>that
>having a certain amount of cash reserves is not only wise, but necessary,
>in
>the event of major (or minor) emergencies (i.e. our annual major
>fundraiser,
>and outdoor historical festival, is rained out; natural disaster
>strikes;
>etc.).
>
>Is there a standard in the museum industry for how much cash should
>ideally
>be held in reserve? Perhaps a certain percentage of the institution's
>annual operating budget? I am curious as to how much other museums
>hold in
>reserve (where possible). Please reply to the e-mail address given
>below.
>
>Thanks in advance!
>
>Lori Tomlinson
>Executive Director
>Florida Adventure Museum
>Punta Gorda, Florida
>[log in to unmask]
>
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