Every Association needs the economic security of a reserve fund. Unforeseen demands or loss of income may necessitate the use of funds which are not currently available in the budget. The purpose of a reserve is financial stability - to support the Association through an emergency situation. Accordingly, the reserves maintained by SLA and by its Chapters and Divisions should not be used to finance day-to-day operations or activities. An ideal reserve fund would be equal to the regular budget for one year. On June 5-6, 1992 the Board of Directors approved a recommendation regarding Chapter and Division investment policy that permits funds to be deposited in principal-protected and insured investment instruments (e.g. checking accounts, passbook savings accounts, CD's and T-bills) or in the Association Pooled Money Market Account.
There is no tax on accumulated earnings of a Section 501(c)(3) Organization and accordingly, such reserves and any income generated by the same are tax exempt.