Monday, April 23, 2012

Can a non-profit save funds for the following year?

Our PTA is developing our budget for next year, and it has been suggested that we plan on setting aside a reserve fund that can be used to fund activities in the beginning of the following fiscal year.  As a nonprofit corporation, aren’t we supposed to spend all of the moneys we take in during the same fiscal year?

Being a nonprofit means that no individual receives a profit from the association; it does not mean that the PTA can’t accumulate funds from one year to the next.  In fact setting aside sufficient funding to use during the first part of the following fiscal year is a sound and financially prudent practice because it assures that there will be funds for such expenses as purchasing insurance, attending training, and other early-in-the year obligations even though the PTA may not have had time to begin its fund-raising activities.