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Actually, locking cash in a 1-year US Treasury would be indefensible. If they ever needed the funds they would have to sell it, possibly for a loss. They shoul
by appleiigs 9y ago
Actually, locking cash in a 1-year US Treasury would be indefensible. If they ever needed the funds they would have to sell it, possibly for a loss. They should be investing in commercial paper with maturities between 1-3 months and would receive a higher return than treasuries with much less risk of loss of principal. (This is what I do for a living)
- lr4444lr 9y agoMy guess is, they probably plan their budget annually like any other non-profit, and are probably well insured against loss. If you do this for a living, can you explain why would a non-profit need almost 50% that liquid? I often read that other cultural institutions like museums are into much riskier assets under professional management. Am I mistaken about what is commonly done, or are you expressing your opinion that widespread practice is wrong?
- appleiigs 9y agoFrom their statements: "The Foundation’s current practice is to maintain at least six months of cash and cash equivalents to support a combination of operating cash and a current reserve fund." So, looks like their annual budget needs that cash. From the OP's chart, expenses are increasing exponentially, maybe their budget is continuing that pattern. We also don't know how lumpy their donations are. Maybe it all comes in during their donation drive. To answer your specific question, I think Wikipedia is not well funded. Many museums and foundations are funded for years to come, so they can take a bigger proportion of risky assets. Wikipedia seems to spend donations as they come in. Needing 50% of their assets liquid highlights what the OP is complaining about - they spend too much. They are simply unable to invest more long-term.