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ROTARY CLUB OF STEAMBOAT SPRINGS POLICY
POLICY NAME: Operating Reserves
DATE APPROVED BY BOARD: August 9, 2021
EFFECTIVE DATE: On approval, policy created from board action at the April 2016 meeting.
NEXT SCHEDULED REVIEW DATE: August 2025
REPLACES POLICY DATED: New Policy
PURPOSE: The purpose of the policy is to guide the Board in setting aside cash in the operating account to assure sufficient funds are available for basic club operations and needed expenditures. It also provides direction to the board not to accumulate excess cash, but to put funds generated by club activities to use through providing funds to the Endowment Fund at the Yampa Valley Community Foundation.
POLICY STATEMENT:
At the time of adoption of the FY budget for the club prepared by the incoming president and adopted by the board, account should be taken of the uncommitted cash in the club operating account. An operating reserve equal to approximately half the prior year’s actual operating expenses should be maintained in the account. Rounding up to the nearest $5,000 is permissible. The end of year financial review process should include a review of any excess funds above the required reserve in the operating account and a specific use for the funds should be identified or excess funds should be transferred to the club Endowment Account at the Yampa Valley Community Foundation. The budget should account for the use/disposition of all anticipated funds in the coming year. A reasonable small budget for contingencies may be included. Funds reserved for larger projects should be accounted for in a restricted fund shown on the Balance Sheet.
Committees with unspent budgeted amounts must propose a specific use for these funds to the Board no later than the May board meeting if they wish the funds to be reserved for future expenditure, which will require charging the expense in the year budgeted. Funds not spent and not reserved will become part of the year end net income.