How should our club deal with a surplus and reserves?

Question: Our Club has started to develop a small surplus of funds and we are wondering about a couple of things. How much surplus are we allowed to accumulate? How do we use the funds if they are getting to be too high? Is it appropriate to invest our surplus funds?

Answer: Although Clubs such as ours are supposed to operate on a "break even" basis, it is acceptable to have a "small" surplus at the end of the fiscal year and the generally acceptable level of accumulated funds is one year's normal cost of operation. This is to protect you in the event that your revenue should suddenly cease and you have commitments to meet (i.e. hall rent, etc.) 

If you do find that your revenue is excessive each year, you probably should consider reducing your annual dues for a while and see if the picture improves. Another way is to use the funds to perhaps cover, or subsidize, the cost of a special event (Christmas Luncheon or Dinner) providing that all Members have the opportunity to participate in the event as technically all surplus funds belong to the Membership of the Club.

In regards to investing the surplus funds, the amount is generally not that high but there is nothing to prevent you from putting what you have into a "secure" investment, perhaps with your bank if it meets their criteria (minimum amount). You are not at liberty in put Club funds in an investment which involves risk.