Many associations keep at least six months worth of their operating budget in reserves in case of a budget shortfall, natural disaster or geopolitical event. But one of the industry’s big mysteries was how associations are handling those financial reserves. A recent ASAE Foundation and Orion Investment Advisors study found that the majority of the 500 professional and trade associations surveyed had a written investment policy and those that didn’t tended to be associations with investment reserves under $1M. And nearly half of them reported drawing upon reserves at some point, underscoring how important those funds can be.

Most associations are using outside investment advisers to manage their reserve funds. Survey results also found that the average investment returns varied by asset size; associations with larger investment portfolios significantly outperformed smaller organizations. Orion deputy managing director Ahmed Farruk, whose firm helped analyze the results, says the survey may be the most comprehensive study of association investments so far. More associations are embracing the idea that reserves that are meant to secure the future of associations should be investment strategies for future growth, not just liquidity.