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Are there laws regarding the carryover of funds?

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Are there laws regarding the carryover of funds?

The treasurer of our PTO insists that we carry over at least $4000 for the next school year in case we don't have as successful a fundraiser next fall. I think that is excessive. Are there any laws regarding the carryover of funds? Shouldn't we spend the money this year's classes raised on them?

I am not aware of any legal requirements for the amount of money carried over as surplus from one year to the next. The amount can vary considerably, and an operating reserve will likely be some proportion of your annual operating budget. It may be 25% to 50% or even more, depending in part on the certainty of your sources of income. You don't want to be in a position where you might run out of cash.
Whenever I am asked about the size of a reserve fund or endowment, I point to Harvard University’s “endowment,” which grew to more than $39 Billion (as in $39,000,000,000) before the market crash starting in September 2008. Harvard spent $1.1 billion from its endowment in the 2007 fiscal year, covering almost one-third of its total operating budget. Although the endowment had dropped to only about $30.7 billion at June 30, 2012, it still supported more than a third of the University’s operating budget for the year.  It has recovered to $36.4 billion as of June 30, 2014.
Update:  Harvard's endowment was reported at $53.2 billion at the end of its 2021 fiscal year.
Wednesday, February 26, 2014

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