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Operating Reserves is a fund set aside to be used for emergencies. It is like a rainy-day fund for non-profits. Here are 5 reasons why Operating Reserves are a must. 1. Emergency Situations - Unexpected events happen. It is just a part of life, and generally requires cash to get through those emergencies. 2. Debt Avoidance - Rather than taking out loans or using credit cards, operational reserves can provide a cushion when there is a cash shortfall. 3. Take Advantage of Cost Saving Opportunities – When you come across a sale or an opportunity for you to save money in the future by investing in a piece of software, you can take advantage of cost saving opportunities. 4. Grant Compliance - Some grant opportunities require that you have a certain amount of cash in your organization to prove financial stability. Having operating reserves helps meet that requirement. 5. Investment Opportunities - Having excess cash allows you to make investments so you can generate interest income.