# Booster Club Reserves and Carryover: How Much to Keep

> How much money a booster club should carry into the next year, how to calculate a reserve target, how to handle restricted funds, and a reserve policy template.

- URL: https://boosterclub.org/finance/reserves/
- Section: Finance
- Updated: 2026-10-08

A booster club reserve is the money it deliberately holds at the end of the fiscal year (its 12-month accounting year) to pay early-season costs in the next year before fundraising starts, plus a cushion against a fundraiser that falls short. The board sets the target in a written reserve policy, the treasurer tracks it, and the membership sees it in the budget as the carryover.

Getting the number right matters in both directions. Too little, and the new board starts the year unable to pay for camp, uniforms, or insurance. Too much, and families who raised money for this year's students watch it sit in the bank, donors lose trust, and a large idle balance becomes a target.

## Terms

| Term | Meaning |
|---|---|
| Carryover | The balance brought into the new fiscal year, set aside to begin operations at the start of the next year before fundraising begins |
| Operating reserve | The part of the carryover the board intends to keep as a cushion, not spend in the normal course of the year |
| Restricted funds | Money a donor gave for a specific purpose (a scholarship, an instrument, a trailer). It can be spent only for that purpose. |
| Board-designated funds | Money the board set aside for a purpose by its own vote. The board can change the designation by another vote. |
| Contingency | A budget line for surprises within the current year |

## How Much to Keep

No federal rule sets a required reserve level for a booster club. The amount is a board decision, and it should come from the club's own calendar, not a rule of thumb.

1. **List the expenses due before the first major revenue arrives.** For a fall program on a July 1 fiscal year, that might be summer camp, clinicians, equipment orders, insurance, and early travel deposits.
2. **Add a cushion** for one fundraiser falling short, often equal to the net of the club's riskiest fundraiser or about 10 percent of annual expenses.
3. **Add restricted balances** separately. They are not part of the operating reserve.
4. **Compare the total with the projected year-end balance** and adjust the budget if needed.

### Worked example

A band booster club has a $60,000 annual budget on a July 1 fiscal year. Before fall fundraising begins in October, it must pay:

| Expense | Amount |
|---|---|
| Summer band camp instructors | $6,000 |
| Uniform cleaning and repair | $1,500 |
| Insurance renewal | $1,200 |
| Truck rental for first competitions | $2,500 |
| **Start-up need** | **$11,200** |
| Cushion (10 percent of annual expenses) | $6,000 |
| **Operating reserve target** | **$17,200** |

The target is about 29 percent of the annual budget. A scholarship fund of $3,000 is held on top of that, as a restricted balance.

## Why Not Keep More

- **Donor expectations.** Parents and sponsors give to support current students. A balance that grows every year raises fair questions about why the money is not being used.
- **Theft risk.** Large balances that nobody watches are easier to steal from without notice.
- **Filing thresholds.** A club with total assets of $500,000 or more at year end must file the full Form 990 rather than the shorter Form 990-EZ, and its gross receipts are what decide whether it may file the Form 990-N postcard. See [Which Form 990 a Booster Club Files](https://boosterclub.org/taxes/form-990/).
- **State thresholds.** Some state charitable registration rules turn on revenue or assets. This varies by state; see [Booster Club Filing Requirements by State](https://boosterclub.org/states/#charitable-registration).

## Why Not Keep Less

A club that ends the year near zero forces volunteers to front money for summer costs, pushes the new board into rushed fundraising, and risks bounced payments. It also cannot absorb a rained-out event or a canceled sponsor.

## Restricted Funds

Restricted gifts are promises. The club must track each one, report its balance separately in the treasurer's report, and spend it only on the stated purpose.

1. Record the restriction in writing when the gift arrives: donor, amount, purpose, and any time limit.
2. Track each restricted fund as its own line in the books and budget.
3. Spend only on the purpose, with the restriction noted on the payment request.
4. Report restricted balances at every meeting and in the annual financial review.
5. If the purpose becomes impossible (the program ends, the item is no longer needed), ask the donor in writing for permission to redirect the gift. If the donor cannot be reached, get professional advice; state law governs changes to restricted gifts.

Reserves and restricted funds belong to the program as a whole, never to individual students. Holding money in a student's name or crediting fundraising to a family can endanger the club's 501(c)(3) status. See [Private Benefit and Individual Fundraising Accounts](https://boosterclub.org/taxes/private-benefit/).

## Where to Keep Reserves

- **A separate savings or money market account** at the same or another federally insured bank, titled in the club's name and EIN (Employer Identification Number), with the same signers and the same monthly review as the checking account.
- **Within insurance limits.** The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per corporation or association at each insured bank.
- **Certificates of deposit** only if they mature before the money is needed.
- **No stocks or other investments** without a board-adopted investment policy and professional advice. Donated stock should be sold promptly unless a policy says otherwise.

Interest earned is income and appears on the treasurer's report and the federal annual return.

## Reserve Policy Template

| Section | Content |
|---|---|
| Purpose | Why the club keeps a reserve (start-up costs, shortfall protection) |
| Target | Formula or dollar amount, reviewed each spring with the budget |
| Where held | Account type and bank |
| Authority to use | Board vote recorded in the minutes (or membership vote, if the bylaws require) |
| Replenishment | How and when the club rebuilds the reserve after using it |
| Restricted funds | How restricted gifts are recorded, tracked, and reported |
| Excess | What happens to balances above target (for example, the board proposes a one-time program investment in the next budget) |
| Review | Annual review date and owner |

## Using the Reserve

1. The treasurer reports the need and the effect on the reserve.
2. The board votes to use the reserve, and the minutes record the amount and purpose.
3. The budget is amended if the use was not in the adopted budget.
4. The next budget includes a plan to rebuild the reserve to target.

## Common Mistakes

- **Mixing restricted gifts into the general balance.** The club loses track of what it owes donors and may spend promised money on other costs.
- **No written target.** Each board guesses, and balances swing from empty to excessive.
- **Reserves in a signer's personal savings account "to earn interest."** It is commingling, and the club may not be able to recover the money.
- **Hoarding without explanation.** Members see a large balance and stop giving.
- **Credits held for individual students.** It endangers tax exemption and creates refund disputes when families leave.

## Checklist

- [ ] List the expenses due before the first major revenue each year (treasurer)
- [ ] Set a reserve target and adopt a written reserve policy (board)
- [ ] Record every restricted gift with its donor, purpose, and amount (treasurer)
- [ ] Track restricted funds on separate lines in the books and reports (treasurer)
- [ ] Hold reserves in a club-titled account with the same signers and review (treasurer)
- [ ] Keep balances at any one bank within the FDIC insurance limit (treasurer)
- [ ] Show the carryover and planned ending reserve in each year's budget (budget committee)
- [ ] Vote before using the reserve and record it in the minutes (board)
- [ ] Review the target each spring with the budget (board)

## Related Pages

- [How to Build a Booster Club Budget](https://boosterclub.org/finance/budget/) for carryover and reserve lines
- [Fundraising Ethics and Donor Trust](https://boosterclub.org/fundraising/fundraising-ethics/) for honoring restricted gifts
- [Private Benefit, Inurement, and Individual Fundraising Accounts](https://boosterclub.org/taxes/private-benefit/) for why money stays with the program
- [Closing the Booster Club Fiscal Year](https://boosterclub.org/finance/fiscal-year-close/) for calculating the year-end carryover
- [Booster Club Banking](https://boosterclub.org/finance/banking/) for savings account setup

---

*This page is general information for volunteer-run booster clubs. It is not legal,
tax, or accounting advice, and BoosterClub.org is not a law firm, accounting firm, or
government agency. Rules change and vary by state and district. Confirm current
requirements with the IRS, the relevant state agency, the school district, and a
qualified professional before acting. If a fact on this page is out of date, we want
to know.*

## Sources

1. IRS: https://www.irs.gov/charities-non-profits/form-990-series-which-forms-do-exempt-organizations-file-filing-phase-in
2. IRS: https://www.irs.gov/instructions/i990ez