WHEREAS, NACDL has defined “Reserves” as its net assets, namely, its unrestricted total assets, less unrestricted total liabilities, at any given date.
WHEREAS, the standard and benchmark for non-profit and trade associations such as NACDL, per the American Society of Association Executives (ASAE) “Operating Ratio Report, 11th Edition,” for Reserves is 50% (i.e., 6 months) of the annual operating budget.
WHEREAS, since 1998, NACDL has been contributing at least 1.5% of the previous Fiscal Year’s gross revenue to its Reserves.
WHEREAS, as of April 2006, NACDL’s Reserves were $2,435,850, or 63.6% of its budgeted revenues for Fiscal Year 2007 of $4,082,022.
WHEREAS, as of April 2006, NACDL’s Reserves considerably exceed the ASAE standard, with “Excess Reserves” of $522,028.
NOW, THEREFORE, BE IT RESOLVED:
(A) NACDL shall adopt the standard and benchmark for non-profit and trade associations to maintain, as a minimum, Reserves of 50% of its annual gross operating revenue budget.
(B) NACDL’s Executive Director shall maintain at least 50% of the Reserves in liquid assets, which is defined as cash, long- and short-term investments.
(C) NACDL shall amend its Investment Policy Statement by inserting on page 1, following the “Financial Objective Statement” paragraph, the following new “Spending Policy” language:
(1) NACDL’s Spending Policy determines the amount of funds NACDL can make available for distribution from the Reserves in any given Fiscal Year. Only funds that exceed the minimum reserve are available for use during the following Fiscal Year. The minimum Reserve is defined as 50% of the total operating revenue from the current approved Fiscal Year budget.
(2) The NACDL Board of Directors, in its Resolution dated February 23, 2002, defined “Reserves” as NACDL’s net assets; namely, its unrestricted total net assets, less unrestricted total liabilities, at any given date. NACDL’s budget process begins in March of each year. Therefore, as of March 31 of each year, if Excess Reserves exceed the minimum as defined in (1), above, then 25% of the overage is available to the Budget Committee to allocate in the development of the following Fiscal Year’s budget.
(3) The NACDL Executive Director is required to maintain at least 50% of the Reserve in liquid assets, which is defined as cash and long- and short-term investments.
(4) Whenever there is a year in which there are no “Excess Reserves,” then the Board-mandated 1.5% contribution to Reserves based on the previous Fiscal Year's gross revenue will be included in the new budget.