I fear you might be confusing “reserves” and “designated funds” (to use the parlance common in UK charity accounting).
Attracting senior staff members might be easier with high reserves, but I imagine it would be easier still if the charity “designated” some money to be used on the staff member’s salary for (say) the next 3 years. SoGive’s methodology is very liberal about this, and the charity is at liberty to set reserves aside, or “designate” them for some purpose, and this is non-binding, and if the charity does this, SoGive totally ignores those funds when considering reserves.
That’s a helpful clarification, thank you. I would be concerned, then, that if an organization were motivated to get SoGive’s seal of approval, they could improve their ratio by designating more of their money for specific purposes. Wouldn’t it be pretty easy to write down a four-year (non-binding) plan that would convert much of the current “reserves” to “designated funds”?
At the outset, I had the same concern, however thus far it doesn’t appear to have been a problem. It’s possible that this may change in time, in which case we’ll cross that bridge when we get there.
I fear you might be confusing “reserves” and “designated funds” (to use the parlance common in UK charity accounting).
Attracting senior staff members might be easier with high reserves, but I imagine it would be easier still if the charity “designated” some money to be used on the staff member’s salary for (say) the next 3 years. SoGive’s methodology is very liberal about this, and the charity is at liberty to set reserves aside, or “designate” them for some purpose, and this is non-binding, and if the charity does this, SoGive totally ignores those funds when considering reserves.
That’s a helpful clarification, thank you. I would be concerned, then, that if an organization were motivated to get SoGive’s seal of approval, they could improve their ratio by designating more of their money for specific purposes. Wouldn’t it be pretty easy to write down a four-year (non-binding) plan that would convert much of the current “reserves” to “designated funds”?
At the outset, I had the same concern, however thus far it doesn’t appear to have been a problem. It’s possible that this may change in time, in which case we’ll cross that bridge when we get there.