The Three-Bucket Approach to Balance Investment and Liquidity in Association Reserves

The Three-Bucket Approach to Balance Investment and Liquidity in Association Reserves

Three piles of cash June 7, 2016 By: Ann Marie Etergino

For associations monitoring their investment portfolios, managing liquidities and emotions during market volatility can be difficult. A strategy that delineates funds for short-term, mid-term, and long-term needs will instill confidence in the organization's financial future.

Recent market volatility, coupled with the 24-hour news cycle, can throw even the most seasoned investors off course. Nonprofit investment committees are not immune to these psychological pressures, either, and can be tempted to react to short-term market declines in an effort to "protect" the organization. However, this short-term thinking can be detrimental to long-term returns. ...