Cash is just a means to an end, or is it?

The state of North Carolina has a "rainy day fund" of approx $800 million for a budget of approx $21 billion.

Think about that figure as you consider Suze Orman's incessant advice to have an 8 month liquid emergency fund for an unforeseen financial storm.

For reference, one month is 8.3% of an annual budget.

In your personal life, do you have such a liquid emergency fund (not a retirement fund, home equity, or other less liquid assests)? 

Do you think the organizations you are involved with have 67% (that's eight months times 8.3%) of their annual budget tucked away in a savings account?

Does your church?  Your local charity? Your party?  Are you financially responsible for any of these groups?  Does your board of deacons/directors/trustees talk about it?

Now think about your government.  How much is enough for a rainy day fund?  Should your government ever sit on that much cash?

I hear some rail for a return of money to taxpayers only to then see them wail that we don't have enough in savings.  Others want more programs or investment in programs in the current year with little provision for the next year.

Each of these entities (a church, a charity, an advocacy group, a government) has a mission.  The organizations struggle with how to best acheive that mission every day.

I write this because I consider how this struggle between mission and cash plays out every time I see that IBM beat earnings estimates or Perdue orders more budget cuts or a rural EMS service revises their budget due to the volitale price of gas or Blue Cross announces that it had a good year when true non-profits sufferred in the same year.

It's not all apples to apples, but that's why a straight-jacket philosophy won't serve the needs of a population.

Where do you find yourself in this mission-cash spectrum at a charity meeting, and do you find yourself in the same place at a rally for programs at the legislature?

I wonder where college and university trustees fall as they consider budgets on those boards.  I then wonder do they carry those same sentiments to legislators as they talk to them about their piece of the pie in the state's budget.  Do the "tax-returners" for taxpayers crusade for "tuition-refunds" to students?  Of course not.

We've got some local government officials that visit here and plenty of community leaders.

How do you determine when cash is the end and when it is the means?

Answer in the small apples of local charities or the large oranges of state government.

As we collectively determine how to move forward in this fiscal environment, whether in small groups or large, the answer to that question will determine the new shape of our lives, organizations, and government on the other side of this deepest of recession of recent decades.

Comments

You've made some interesting points

and I bet the answer to some of the questions you pose will be different for some than they would have been when the state/federal government/our own budgets were flush with cash.  I was wondering the other day whether my own county had made budget plans based on the tax base we have seen explode or whether it made plans based on the tax base we'll wind up with after all the foreclosures that are sure to hit this county.  We have a lot of McMansions that have gone up in Union County and I'm sure many of these people bought more than they could afford.



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