Idle Cash

Every church should have one bank account and one investment or money market account. Anything more, except in special circumstances, is unnecessary. Here’s how I feel it should work.

The checking account is where all money is deposited as it is received. All money – no exceptions. The money market account is where the church’s “extra” money sits until it is needed. I know – there is no such thing as extra money. Here’s what I mean – the average church needs about 60 days’ worth of cash in its checking account, at most 90 days. All cash over that should be moved to a money market account where it can earn a little interest.

Then, as money is needed in the checking account, it is transferred from the money market account. And, as the church receives “extra” money (think the December rush) it is transferred to the money market account.

This keeps the church with a solid balance in the checking account and its “idle cash” is earning interest which can be used for the church’s operations.

What are the exceptions? Glad you asked. Here are a few and I’m sure you’ve got others:

  • A capital campaign where you want to have a checking account for that campaign. I suggest you also have a money market account for that account. Then, as you receive the initial, pre-construction influx of money the bulk of that is moved to the money market and then, when the construction bills arrive, the money is moved to the campaign checking account to pay the bills.
  • An account which is used only and entirely for pass-through funds and by having that checking account it will help the bank reconciliation be cleaner and clearer. Here’s an example:
    • An account which is used to receive online gifts from an auction or sale of materials. Having this account means you can more clearly determine a sale versus a gift that in the main checking account. E.g., you receive $20 in the “sales” account you’ll know that was for a book or retreat versus a tax-deductible gift.

Lead On!