Photo by Steve Wampler
The NonProfitTimes recently reported that around 12% of nonprofit organizations don’t have any cash on hand – with the majority (61%) having less than 3 months of cash on hand!
Nonprofits should have at least 90 days of cash on hand to ensure they remain healthy financially. To figure out how many days your organization could last with its cash on hand, calculate your defensive interval:
The Defensive Interval is a ratio that will show you how long your organization could survive with its cash on hand. Organizations should have at least 90 days worth. To calculate the defensive interval:
(Cash + Marketable Securities)/(Operating Expenses/365 days)
To read more about how to calculate your debt ratio, program expense ratio, and working capital ratio check out “Want to know how your nonprofit is doing financially?” Check out The NonProfit Times additional survey findings here.