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Hi friend, A few issues ago, I told you about the worst week of my career. The one where I was burned out, ready to walk out the door, and instead opened a spreadsheet. I calculated my runway (how many months I could survive without a paycheck) and it changed everything. That story was about my personal finances. But here's what I didn't tell you. The same spreadsheet I built for my household, I've built for every business and nonprofit I've ever worked with. The math is nearly identical. The stakes are just larger, and the audience across the table is bigger. And when I ran that math on my own business a few years back, during the tail end of the COVID economy, I asked a different version of the same question. Not how long can I survive if I lose my job. But how long can this business survive if something like COVID happens again. That question is what reserves (or as most of us call them, savings) are actually for. And most people are thinking about them wrong. If you're a nonprofit leader, you have almost certainly been in a board meeting where reserves came up. Someone asked why they're too low. Or too high. Or why you haven't touched them yet. Or why you're touching them now. If you run a business, the version of this conversation happens with your accountant, your investor, or your spouse. Should we be sitting on this much cash? What are we saving it for? Why isn't it working harder? If you're a household, it might come up in a quieter voice, from your own head, on a Sunday night when the bills are due and you're wondering whether you can afford to breathe. In every version of this conversation, the same misconception is at the root: People think their savings are just savings. They aren't. Savings, reserves, emergency funds, cash on hand, whatever you call them, are a strategic asset. And once you understand what they actually do, you make different decisions about them. Here are the three things I want you to know. 1. Your savings aren't money that isn't working. The most common thing I hear from board members, business owners, and household CFOs alike is some version of: "Shouldn't we be putting this money to work?" The premise is that money sitting in savings is idle. Lazy. Underperforming. That it should be invested, spent on programs, put into a new hire, thrown at the next opportunity. Here's the reframe: your savings are working. They're just doing a different job. Savings are doing the job of buying you time. Time to think. Time to respond. Time to say no to a bad deal because you're not desperate. Time to sit with a hard decision instead of making it under pressure. An organization with savings can negotiate. An organization without them is at the mercy of every funder, client, or lender who happens to be at the table. A household with savings can leave a job. A household without them is stuck. That's not idle money. That's the most active money you have. What this means for you: The next time someone (including your own inner voice) suggests you should "put your savings to work," ask them: "What job do you think this money isn't doing?" Because the answer, if you look at it honestly, is that your savings are doing the single most important job any money can do, they're keeping your options open. 2. Your savings aren't just for disasters. The other misconception is that savings are for emergencies only. Fires. Floods. Pandemics. The proverbial rainy day. That framing is why so many organizations underfund reserves and why so many households underfund emergency accounts. Because a hypothetical disaster doesn't feel urgent, and it certainly doesn't feel as important as the very real, very immediate thing you could spend that money on today. But here's the truth: the events that actually deplete your savings are usually smaller and more frequent than the disasters you're planning for. A key funder pulls back their annual grant. A major client renegotiates their contract downward. A key employee leaves and you need a bridge before you can hire. Your rent goes up. Your health insurance premium jumps 30%. Your car needs repairs the same month your kid needs braces. These aren't disasters. They're Tuesdays. And they're what actually eat your savings, month by month, quietly, in ways most organizations and households never plan for. What this means for you: Stop planning for the once-in-a-decade disaster. Start planning for the once-a-year annoyance. Your savings should cover the cumulative impact of small setbacks, not just one giant one. That number is almost always larger than what the disaster framing suggests. 3. Your savings aren't the enemy of your mission. This is the one that gets under my skin, especially in the nonprofit world. There's a persistent narrative (pushed by some funders, some board members, and honestly some sector-wide guidance) that nonprofit reserves are a sign the organization isn't spending enough on its mission. That every dollar in reserves is a dollar not going to the people you serve. This framing is not just wrong. It's actively harmful. And it's the reason so many nonprofits collapse the moment a single funder walks away. Reserves are not the opposite of mission. Reserves are what protects your mission from the volatility of the world you operate in. An organization with strong reserves can weather a bad year and keep serving. An organization without them has to lay off staff, cut programs, or shut the doors — none of which serve the mission. The same is true for businesses and households. Savings aren't the opposite of growth. They're what makes growth sustainable instead of fragile. What this means for you: If you're a nonprofit leader and someone on your board or in your funder community suggests your reserves are too high, you have permission to push back. Politely, firmly, and with data. Reserves are a mission decision, not a bureaucratic one. If you run a business, the same applies. Savings aren't hoarding. They're durability. One more thing: Here's the framework I use with every client, every board, and every household I talk to about this. It's a three-part definition, and once you internalize it, the math gets easier because you know what you're solving for: Your savings are the money that buys you the ability to say no. No to a bad client. No to an exploitative funder. No to a job that's crushing you. No to a decision made in panic instead of clarity. Every dollar saved is a dollar of freedom.
That's it. That's the whole game. The math on how much you need (whether it's 3 months, 6 months, 12 months of operating expenses) is downstream of that reframe. Once you understand what your savings are for, the number you need becomes a question of how much freedom do I want to buy? For some organizations, three months of runway is enough freedom. For others, twelve months is barely enough. There's no universal answer. But there's a universal question, and now you know how to ask it. Want to go deeper? Three ways I can help: 📌 Trying to figure out how to calculate your own savings target — or how to have this conversation with your board? Book an appointment with me. Choose 30 minutes for a quick question or 60 minutes if you want to walk through something more complex together. 🎯 Need ongoing financial leadership? That's what fractional CFO work is for. See how I work with clients. Otherwise, just keep reading. Next issue, I'm taking a slight detour. I just got back from a Girls Trip to Saint Lucia and I came back with three lessons about connections, rest, and the ROI on making time to actually stop. If you've been running yourself into the ground, this one's for you. See you in two weeks,
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