What is a prudent reserve and how do we establish one?

A prudent reserve is an amount of money set aside that can be used to meet operational expenses if contributions decrease. The WSO has a policy for their prudent reserve “not to exceed one year’s operating budget plus outstanding liabilities plus one-time capital expenditures.” Each service body can establish its own prudent reserve policy. It’s common for a prudent reserve to cover a three-month period. Refer to Budget Guidelines for Service Bodies and Fundraising and Prudent Reserve Guidelines for Groups and Service Bodies.