Cash Management, Reserves, and Investments

This policy was created to provide guidance for short-, medium-, and long-term financial resources to help sustain the mission of the Montgomery County Road Runners Club (MCRRC).

This policy:

  • Incorporates features that allow flexibility in response to the ever-changing needs of our Club.
  • Balances operational cash needs to support the annual operating budget, with opportunities to invest funds over a longer term for higher returns.
  • Shall be administered with the principle of earning a reasonable return on MCRRC’s funds without undue risk.

In any year, the operations of the Club may generate a surplus, or require a drawdown from existing investments (to be elaborated below).  Any surplus thus generated, combined with surpluses from prior years, will be invested in two different buckets of funds: short-term reserves, and long-term reserves.  As the Club operates on a cash accounting basis, short- and long-term reserves may also be used to accrue funds for financial needs greater than provided for by the annual operating budget (e.g., large and/or predictable capital expenditures).

The guidelines for investment and usage of the surplus Funds are as follows:

  1. Cash: To keep approximately the next three months’ expected cash needs.
  2. Short-Term Reserves: To keep the greater of three month’s fixed expenses or $75K in cash or cash equivalent investments as short-term reserves PLUS any amount designated for significant capital expenditures during the next twelve months.  The Executive Committee (President, Vice President, Secretary, and Treasurer) of the Club will review and adjust these limits based on current outlook for club expenses and revenues, projected capital expenditures, recent investment performance vs longer-term trends, inflation, and the outlook for investment returns (particularly susceptibility to significant downturn).  The Executive Committee can increase the limits greater than those designated for significant capital expenditures upwards to an additional six months or $150K, for a period of one year.  Increases beyond these amounts or for additional time, or a decrease in the set limits (three months or $75K), will require Board approval.
  3. Allowable investments for Short-Term Reserves: These should be held in interest bearing accounts or money market funds offered by the Club’s brokerage firm.  The Club will not use tax-exempt money market funds and should choose from funds with low operating costs.
  4. Long-Term Reserves: Any surplus funds beyond cash and that required to be invested in short-term reserves will generally be invested in low-cost, index funds. This index (or indices) can be a combination of a domestic/global stock index (examples: VTI or VT) and a domestic government or investment grade or better bond index (example: BND). Allocation for the stock index will range from 50% to 80%, with the remaining in the bond index. The Executive Committee can adjust the percentage allocation to stock in that range; any adjustments either below 50% or above 80% will require Board approval. The Executive Committee also may consider an appropriate target date fund as an alternative to individual stock and bond index funds.
  5. Withdrawal of Funds from Short-Term and Long-Term Investment Accounts: Just as the above funds will accrue using surplus from Club operations, the Club is expected to use these funds for any necessary expenses or cash needs not covered by expected revenues in each year.  The Executive Committee will first draw money from the Short-Term Reserves. If the draw doesn’t breach the limit, Long-Term Reserves may still be sold so that the Short-Term Reserves and Cash are up to an adequate level as determined by the Executive Committee, as identified by #1 and #2 above.
  6. No other investment types are permitted without prior approval from the Board.

The Executive Committee will be responsible for overseeing this Policy and Guidelines.  The Executive Committee will make investment recommendations within the parameters of this Policy as established and reviewed on a periodic basis, reporting to the Board at least semi-annually.  A member of the Executive Committee or the Executive Director will facilitate the initiation of investment transactions such that the Guidelines above are adhered to.

Corporate Resolution for Bank and Investment Account Authorized Individuals

Be it resolved that the following officers and employees of the Club will be the authorized individuals and signatories on any bank or investment accounts in the Club’s name:

  • President
  • Vice President
  • Treasurer
  • Executive Director

Any payment for expenses by transfers, checks, or cash greater than $1,000 will require authorization by at least two of the above officers.  Such authorization can be electronic and must be in addition to the individual initiating the payment.

The account signatories and corporate resolutions on file with financial institutions must be changed within 45 days after the change of any person in the offices above.

(Updated, May 2023)