Is there a cap to how much we can keep in our checking account from year to year as a homeschool support group?
No, there is not a cap on how much money a homeschool support group can accumulate.
While it is prudent to have a small surplus to meet future needs, most nonprofits do not accumulate a lot of money year after year. If you have plans for a big event in the future, then it is acceptable to accumulate funds for a few years. But without a reason to be accumulating money, the funds should be spent on your current members (but always keeping a small reserve).
Here’s a rough rule of thumb: If you have more than one year’s income as a surplus (and no plans for the future use of the money), then you should probably make plans to spent some of it on your current members. If you have 2-3 years of accumulation, it’s time to readjust your dues or plan a big party with all expenses paid! 🙂
Having a budget should help you manage how much surplus you carry forward.
Sad but true story: My support group leader realized she would end the year with a surplus, so she threw a very nice catered dinner for all the members and their husbands. It was a lovely date night with babysitting provided!
Unfortunately, the leader drained the checking account and didn’t realize that the annual insurance bill was due in the summer before she had collect dues from the members! Ouch! She had to ask several members to loan the group money in order to pay the bills over the summer. Good planning, a budget, and carrying a surplus would have avoided her embarrassing situation.
Do you have a copy of my ebook Money Management in a Homeschool Organization?
It might be helpful to you.
Hope that helps,
Carol Topp, CPA