Submitted by SOT 2013–2015 Treasurer Denise Robinson Gravatt and 2014–2015 Treasurer-Elect George P. Daston
The Society of Toxicology (SOT) formally started a reserve fund in 1994, responding to the downturn in the economy and with the intent of implementing fiscally responsible practices to ensure the long-term stability of the Society. The purpose of the Reserve Fund is to protect and preserve the Society and to ensure that SOT can pay its bills in the event of a catastrophic event (such as cancellation of an Annual Meeting). It is typical practice for non-profit organizations to have a financial reserve equivalent to 75%–100% of the annual budget.
While SOT is a not-for-profit organization, revenue is generated from the journal, the Annual Meeting, and membership dues to provide funding for our various activities. Some of this revenue also has been utilized to build the Reserve Fund over time. SOT’s financial policies dictate a Reserve Fund of 75%–150% of the annual operating budget. In recent years, the Reserve Fund has reached these limits, and funds in excess have been transferred to the Supportive Fund. The purpose of the Supportive Fund is to provide investment income to sustain ongoing programs that further the mission of the Society: "creating a safer and healthier world by advancing the science of toxicology."
The Reserve Fund has a conservative investment strategy, in keeping with its purpose of providing financial stability for the Society. The Supportive Fund has a somewhat less conservative investment strategy, reflecting its purpose of portfolio growth and income generation. Under Council’s guidance, the investment income generated from the reserves has been used for a variety of purposes, such as matching member contributions to help our Endowment Fund grow, providing funds for the 50th Anniversary celebration and other strategic activities, and, in lean years, to help balance the budget.
Given that the Reserve Fund has grown substantially, it was considered that the excess funds could be put to more active use for SOT strategic initiatives. After significant deliberation, SOT Council approved a recommendation from the Finance Committee that the Reserve Fund be reduced and the funds in excess of 110% of the current operating budget be moved into the Supportive Fund. The investment policy of the Supportive Fund will enable it to more actively generate revenue for SOT’s Emerging Initiatives and other short- to mid-range activities in support of SOT’s strategic plan. The policies governing the Supportive Fund also were reframed to align and clarify its purpose as a Strategic Initiatives resource.
As Council completes its work this year on the Society’s new strategic plan, having a fund with a dedicated purpose provides a transparent mechanism and specific resources for limited duration strategic initiatives and enables the costs of these initiatives to be supported by investment income rather than adding to the bottom line of the operating budget. This approach is both fiscally responsible and has the potential to make our Society’s resources work even more effectively and efficiently for our future.