• Michael Clark

    The costs of dissolution and/or restoring of essential functions must be weighed carefully when a nonprofit calculates its reserves and their adequacy. All too often, the vicissitudes of funding (shifting interests of funders, the “starvation cycle” generated by insisting that essential management costs be ignored or slighted, etc.) too often mean that reserves must not only cover cash shortages but also sudden gaps in revenues and lengthy merger or dissolution proceedings. Every nonprofit’s management and board leadership must carefully weigh these factors to assure that obligations to employees, creditors, etc., are considered along with those of the nonprofit’s beneficiaries.