Advancement · Grants & Funding · Financial health

If the income stopped today,
how many months
could you keep going?

Type operating expenses and the reserve on hand. The calculator turns them into months of spending, sets them against the board’s target and shows how long a yearly addition takes to close the gap.

Measure the reserveWhat you get
$12one-time · every device you sign in on
Buy · $12

Included with Caveat Classroom and Whole-school licenses. Or get it in the Grant writer’s desk, $49 for 32 items.

The operating reserve calculator

The worked example is made up: a $1.45 million education foundation with $260,000 in reserve. Nothing you type leaves this browser.

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What you get

Advancement · Grants & Funding$12 · included with Classroom and Whole-school licenses

What you finish with
Months and days of reserve, the target in dollars, the gap, the years to reach the target and a comparison with 3, 4, 6 and 12 months. It prints as a summary for the finance committee and downloads as a spreadsheet.
Who it is for
Executive directors and finance staff of nonprofits and school foundations, treasurers, board finance committees and PTO officers.
Format
Browser calculator for a phone, tablet or computer, by touch or keyboard. Prints a summary; downloads a spreadsheet (.csv); export and import a file.
Access
$12 one-time, yours on every device you sign in on; the tool opens once you are signed in with it. Included with Caveat Classroom and Whole-school licenses. Also in the Grant writer’s desk ($49) and the Advancement Suite pass ($99), and 1 more bundle. Everything you type stays in this browser; nothing is sent to Caveat.
Where it lives
The Grants & Funding space in Caveat Advancement.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. Take operating expenses from the audit or budget.
  2. Subtract non-cash items such as depreciation.
  3. Type the reserve that is unrestricted and available for operations.
  4. Choose the board’s target and a planned yearly addition.
  5. Print the summary for the finance committee.

Measure the reserve

How the reserve is measured

Cash months, not just dollars.

The worked example: an education foundationCash spending$1,400,000$1.45M − $50K depreciationA month$116,667÷ 12Reserve2.23 months$260,000 ÷ $116,667To 3 months$90,0003.0 years at $30,000The worked example: an education foundationCash spending$1,400,000$1.45M − $50K depreciationA month$116,667÷ 12Reserve2.23 months$260,000 ÷ $116,667To 3 months$90,0003.0 years at $30,000
Months of reserve answer a board’s most practical question: if income stopped today, how long could the work go on?

What counts

An operating reserve is unrestricted money the board has set aside to keep operations going through a gap in income, a delayed reimbursement or an emergency. It excludes donor-restricted funds, endowment principal and the value of buildings and equipment. Depreciation is an expense on paper but uses no cash, so it is taken out before dividing by twelve.

Setting a target

Three months of spending is a widely cited minimum; organizations that depend on reimbursement grants or one big annual event often aim for six. The target belongs in a board-approved reserve policy, along with who may use the reserve, for what, and how it is rebuilt afterwards.

Sources

  1. Nonprofit Operating Reserves Initiative (NORI) Workgroup. (2008). Maintaining Nonprofit Operating Reserves: An Organizational Imperative for Nonprofit Financial Stability.
  2. Propel Nonprofits. Operating reserves: policy toolkit and the months-of-cash measure (propelnonprofits.org).
  3. Financial Accounting Standards Board. ASU 2016-14, presentation of financial statements of not-for-profit entities: liquidity and availability of resources (fasb.org).
  4. Internal Revenue Service. Form 990 instructions: net assets without donor restrictions (irs.gov).

The worked example is made up. Your reserve policy and auditor define the figures. Your numbers stay in this browser. Support: team@caveatacademic.com.