What "Normal" Really Means for Association Reserves - and How Peer Benchmarking Helps

Walk into almost any association finance discussion and a familiar question comes up: “Are we where we should be?”

It’s a reasonable question but not an easy one to answer. Many organizations look for a clear benchmark, often defaulting to general rules of thumb around reserve levels. The challenge is that there isn’t a universal definition of what’s “right.” What’s appropriate for one organization may not make sense for another, depending on its structure, revenue mix, and risk profile.

In practice, this is where many boards get stuck. Without context, reserve targets can feel arbitrary, either overly conservative or unintentionally risky.

That’s where peer benchmarking becomes especially useful but not in the way many expect.

Rather than providing a single answer, benchmarking offers context. It allows organizations to evaluate how their financial position compares to similar peers, helping to ground internal discussions in data instead of assumptions. Used well, it functions less as a rulebook and more as a sanity check.

Association Reserve Strategies Vary

The value of that perspective becomes clearer when you consider how varied reserve strategies can be across the association space. Differences in size, mission, revenue streams, and operating models all influence how much liquidity an organization needs to maintain. Without a relevant comparison set, it’s easy to misinterpret what’s typical or appropriate.

Of course, not all benchmarking is equally useful. The quality of insights depends on looking at the right peer group, which are organizations similar in scale, structure, and financial complexity. It also depends on using reliable, standardized data. When comparisons are built on consistent sources, such as publicly available financial filings, they become far more actionable and less anecdotal.

Tools that aggregate and organize this type of data, such as benchmarking dashboards built on Form 990 information (including platforms like SONI), can make it easier to explore trends across peer groups and identify meaningful patterns. More importantly, they allow leadership teams to move beyond isolated data points and into a more informed, strategic discussion.

Ask Better Questions

When used effectively, benchmarking helps shift the conversation. Instead of asking, “Are we hitting the right number?” organizations can begin asking more productive questions:

• How does our position compare to peers with similar risk profiles?
• Are our reserves aligned with the volatility of our revenue streams?
• Where might we be over- or under-positioned relative to our strategic goals?

These are the kinds of questions that lead to better decision-making, not because benchmarking provides the answer, but because it improves the quality of the discussion.

Ultimately, benchmarking doesn’t replace strategy, it strengthens it. It offers a clearer picture of where an organization stands, but it doesn’t dictate where it should go.

Reserve strategy should always reflect an organization’s unique circumstances, including its tolerance for risk, liquidity needs, and long-term priorities. Peer data can inform those decisions, but it shouldn’t override them.

The goal isn’t to match your peers.  It’s to understand them well enough to make more confident, informed financial decisions for your own organization.

Organizations interested in exploring peer benchmarking further can access Raffa Investment Advisers’ Study on Nonprofit Investing (SONI) dashboard, which provides comparative insights based on Form 990 data. Our team is also available to discuss how benchmarking can be applied in practice, including how it supports reserve strategy and financial decision-making for associations. We regularly host webinars on this topic and are happy to connect directly with organizations looking to dive deeper.

Juliana Salamone is a Senior Portfolio Manager at Raffa Investment Advisers. She works with nonprofit and association clients on investment strategy, reserve management, and financial decision-making, helping organizations align their portfolios with long-term goals and operational needs.