Purpose: The purpose of the reserve policy is to ensure the long-term financial stability of EO Orange County and to protect its mission by establishing and maintaining adequate reserves. This policy safeguards against unanticipated financial circumstances and ensures operational continuity in emergencies.

Reserve Requirement: EO Orange County will maintain reserves equivalent to 9-months of operating expenses. Operating expenses are defined as those necessary for chapter administration, legal and finance (including bank fees), software, and other essential functions as defined by the Chapter’s finance team.

Minimum Budget Allocation to Reserves: Future boards must allocate a minimum of 5% of the total budget to the reserve fund annually until the reserve is fully funded to the required 9-month operating expense level. This ensures a consistent and structured approach to achieving the reserve goal.

Restrictions on Reserve Use:

1. Emergencies Only: Reserves are designated for use in emergencies only, such as unexpected revenue shortfalls, critical program support, or unanticipated expenses that cannot be funded from the annual operating budget.
2. Budget Reductions Trigger Use: Reserves may be accessed only if the annual operating budget has been reduced from the previous year or if an unforeseen financial emergency threatens the sustainability of the chapter’s mission.
3. Approval for Use: Any use of reserve funds must:
   • Have a 30-day written and email notice to the entire membership.
   • Approval by the current board of directors according to the Bylaws.

Prohibited Use of Reserves: The reserves shall not be used for non-emergency purposes, including but not limited to:

• Routine expansion of chapter activities.
• One-time large expenditures unrelated to the core operating budget.

Governance and Review:

1. The Finance Committee will review the reserve balance annually and adjust the required reserves to reflect changes in the annual operating budget.
2. The policy and the status of the reserve funds shall be communicated to each incoming board to ensure alignment and understanding of reserve restrictions.