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Tim McDermott “Is Your Money Making Money?”

Is your money making money?

Right now, banks are giving away free money!  Picture walking by an ATM machine with hundred-dollar bills flying out of the machine for anyone who wants them! That is what is happening now, and so few organizations are taking advantage of it. 

I know of one organization that recently sold some property for over one million dollars.  When I asked them where the money was – they said it was sitting in their bank’s checking account – earning .04% or basically nothing.  When I told them they could be making $45,000 – $50,000 a year on their money – risk free – they gave this “What are you going to sell us look?”

I am not selling anything, and I don’t make a commission on what I am about to share with you.  If you don’t have a Financial Advisor for your ministry, then I would encourage you to get one.  The professionals are always the best source.  I just want to share with you what I have learned from my practical experience as a former CEO (and nerdy numbers guy) to help you.

First, I want to give you the policy answer and then secondly, the practical answer to help you get your free money.  Also, I want to throw in a personal thought for you.  Are you ready?

The policy answer is that every organization should have an investment policy which the Finance Committee (Board) should approve.  It really depends how much risk your organization wants to take on as to what that policy says.  My experience is that while most of us personally have money in our 401(k), 403(b), mutual funds, stocks, etc. – for retirement – most boards don’t want to take on that risk.  I served on a staff with Finance Committee members who in their own private businesses took on a lot of risk and made a lot of money.  Some of them did investment banking for a living, but once they got on a nonprofit board, they become very conservative.  They only wanted to put any extra cash in government backed instruments like bank savings, CD’s, T-Bill, or Repurchase Agreements that were backed by the FDIC.  They didn’t want to risk a loss on anything with the stock market.  Once the Finance Committee (or Board) sets the parameters, it’s up to the CEO or General Manager to work within that Investment Policy. 

The practical answer is to put your money in at least an online savings account (Google “best online savings accounts” to find one).  The online banks don’t have the brick-and-mortar overhead, so they pay higher rates.  Most are online so you won’t be able to go visit them, but you can call them.   I like to use names I know – although the main thing is they are FDIC insured.  Rates have climbed the past few years up to over 5%.  Best practices recommend every organization should have at least 3-6 months of reserves set aside for a financial emergency.  That money should be making money.  Online savings banks that are backed by the FDIC and carry ZERO risk of losing principle are paying about 5% now.  That means one million dollars would be $50,000 this year for your organization!  To be fair, rates are supposed to decrease this year – so the rates may not be this high.  One thing you can consider doing is building a CD ladder where you can stagger the term of when CDs mature.  Rather than putting a large amount in now, you put smaller amounts in over the next few months to lower the interest rate risk.  No one will really know for sure if rates will go up or down so this is a great way to hedge that risk.  I can tell you though that if rates go down as they did several years ago, the online banks will still be paying a lot more than the conventional brick and mortar banks.  When I worked in Houston, we had a friend of the ministry who handled all this for us.   We told him how much cash we needed to have immediate access to and how much was long term.  He built our CD ladder based on that. (If you really want to go next level, some of the investment banks have savings accounts that are FDIC insured that pay a higher rate than online banks.  Also, when you get CDs from other banks you get that banks FDIC insurance protection – since you only get $250,000 protection per bank).

So, if all this sounds Greek to you, have your CFO or Treasurer read this article. Right now, while we are all looking for new revenue streams, this can be an easy one to help your organization.


Personal thought.  The above just doesn’t apply to your organization.  Many of the online savings accounts are for you too in your personal life!  A lot of them have no minimum balances to open an account and no monthly fees.  They simply link to your checking account, and you do transfers from there.  The only negative I have found is that it may take three to four days to transfer back and forth so you must plan for that if you are needing the cash for a major purchase. 


And see – it does pay to read His Air. 


If you would like to talk further about how your organization’s money or you have questions, email me at the address below and we can schedule a time to talk.


With over 40 years of broadcasting experience Tim McDermott is now consulting Christian radio stations and organizations.  He is also a CPA and can be reached at Tim@Tmcdermottcpa.com

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