The preceding sentence may give the unwary reader the sense that this item is an asset, a debit balance.
[4] A large organization that has a steady, reliable income source is unlikely to burn through more than about three months' expenses during an unexpected financial shock.
[4] Grantmakers, for example, frequently maintain operating reserves of more than 12 months because their income often depends on a volatile stock market.
[4] A large animal protection organization has about a 10% chance of losing a quarter of their revenue during a year, which would require about three months' reserves to cover, and a 1% risk of losing half their revenue during a difficult year, which would require reserves equal to six months' expenses.
[4] Small animal protection organizations have more volatile income patterns, so they need higher reserves, potentially exceeding more than a year's worth of expenses.