An interesting question, Lori. I have never had to
worry too much about cash reserves for the museums I worked in but I do for a
small national foundation of which I am treasurer. I keep in cash enough money
for our annual operations plus an amount equal to what I expect to receive in
donations of $500 or less. Any surpluses are transferred to our scholarship
trust fund, where they are invested 65% in fixed income securities and up to 35%
in mutual funds.
I have never seen much discussion on this topic. I
think you will have to work out a formula with your board, as we
did.
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