Which element must the fiscal plan include regarding reserves?

• A. Documentation of reserve funds or available credit at least equal to operating costs for the first three months
• B. An annual investment strategy
• C. A line of credit for marketing
• D. A reserve fund for marketing campaigns

Answer: (A)

The key idea here is ensuring liquidity to keep operations smooth in the face of cash-flow gaps. The fiscal plan must show reserve funds or available credit that cover at least three months of operating costs. This amount acts as a financial cushion so the agency can continue essential services if funding calendars shift, grant reimbursements lag, or revenue dips temporarily. It demonstrates that the organization can meet its unavoidable expenses—salaries, rent, utilities, program costs—during a disruption, without scrambling for funds or risking service interruptions.

Having actual reserve funds or an accessible line of credit for that three-month window helps maintain stability and credibility with funders and regulators.

The other options aren’t tied to maintaining ongoing operations through a cash shortfall. An annual investment strategy speaks to long-term growth rather than immediate liquidity needs. A line of credit for marketing or a reserve specifically for marketing campaigns addresses growth or promotional spending, not the core requirement of sustaining essential services during revenue gaps.