How to Calculate Cash on Hand for Nonprofits
Cash on hand is a critical metric for nonprofits to manage their liquidity and ensure they have enough funds to cover their expenses. Calculating cash on hand helps nonprofits make informed decisions about their financial future.
- Enter your nonprofit’s monthly expenses, monthly revenue, and current cash on hand.
- Click the “Calculate” button to see your cash on hand calculation and a visual representation of your cash flow.
The formula to calculate cash on hand for nonprofits is:
Cash on Hand = Current Cash on Hand + (Monthly Revenue - Monthly Expenses)
Our calculator uses this formula to project your cash on hand for the next 12 months.
| Sector | Average Cash on Hand | Median Cash on Hand |
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| Year | Average Cash on Hand | Median Cash on Hand |
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- Regularly review and update your cash on hand calculation to ensure accuracy.
- Consider maintaining a cash reserve equal to 3-6 months of expenses for unexpected events.
- Diversify your revenue streams to improve cash flow stability.
What is a reasonable cash on hand target for nonprofits?
Nonprofits should aim to maintain a cash on hand balance equal to 3-6 months of expenses. This range allows for unexpected expenses and provides a financial cushion.
How often should nonprofits review their cash on hand?
Nonprofits should review their cash on hand situation regularly, at least quarterly, to ensure they have an accurate picture of their liquidity and can make informed decisions.
IRS Guidance on Cash Method of Accounting
Managing Cash in the Time of COVID-19