[Foundation-l] Building up the reserves

[Andrew Gray]

On 3 March 2010 20:53, Andrew Gray <andrew.gray at dunelm.org.uk> wrote:

> mid-2007 - - - - - $1m
> end-2007 - - - - - $2.3m - - - - - $0.21m - - - - - 11 mos.
> mid-2008 - - - - - $3m - - - - - ($0.32m) - - - - - 9 mos.
> end-2008 - - - - - $6.7m - - - - - $0.43m - - - - - 15 mos.
> mid-2009 - - - - - $6.2m - - - - - ($0.54m) - - - - - 11 mos.
> end-2009 - - - - - $12.5m - - - - - $0.65m - - - - - 19 mos.

It occurs to me this morning that there's a major problem with that
last column - it's x months reserves *at the previous six month's
averaged operating costs*. Costs are increasing all the time. (Fun
fact: the WMF's operating costs seem to have increased linearly, at a
steady $18ish-k/month, over the past few years)

Adjusting for that, we end up with... hmm, something like

end-2007 - - - - - 7 mos.
mid-2008 - - - - - 6 mos.
end-2008 - - - - - 11 mos.
mid-2009 - - - - - 9 mos.
end-2009 - - - - - 15 mos.

Still pretty good (after the last two fundraisers), but not quite as
comfortable as it originally looked - and, presumably, it gets a
little tighter right before the fundraisers. That said, it suggests
that purely from a "safe margin" perspective, we could safely lower
the target amount for the late-2010 fundraiser - we did very well last
year, after all.

On the other hand, William's suggestion about treating this as the
nucleus of an endowment rather than as an operating margin is an
interesting one. Hrm. Further research, as they say...

-- 
- Andrew Gray
  andrew.gray at dunelm.org.uk