Put Your Excess Cash to Work for Your Organization With Cash Management

Put Your Excess Cash to Work for Your Organization With Cash Management

For the first time in years, short-term U.S. Treasuries have become attractive investments for cash. These U.S. government-backed, low-risk securities can be easily bought and sold and offer yields that help defend against inflation. If your organization has temporarily idle cash, it may be prudent to consider investing it in a cash management program.

Put Your Excess Cash to Work for Your Organization With Cash Management

Why Now?

While checking account and money market rates still hover near zero, the recent sharp rise in interest rates has driven higher yields on short-term Treasuries.

The yield on a 2-Year Treasury has risen 3.87% in the past yearSource: U.S. Department of the Treasury. As of 11/14/2022.

How Can My Organization Benefit From a Cash Management Program?

An organization sitting on significant cash that doesn’t need to be deployed right away should consider options to responsibly invest that cash to limit its purchasing power erosion.

Here are a few areas to consider putting your cash to better use:

  • High Checking Account Balance
    After you’ve developed a comfortable 3-6 month operating expense cushion, extra cash in a near zero-returning checking account can be invested with a short-term, low-risk strategy.
  • Grant Funds Not Yet Spent
    Organizations that steward grants may have an opportunity, if allowed by the grantor,  to invest that grant money and use the income earned on operating expenses.
  • Low-Yielding Money Market Funds
    If you hold large balances in money market funds that still offer minimal yields, reinvesting in short-term Treasuries is a conservative, low-risk alternative.

Source: Checking Account and Money Market rates are the National Deposit Rates from FDIC as of 10/17/2022. Short Term Treasury Ladder rate is based on a 2-Year Treasury ladder built from Treasuries available at Schwab as of 11/15/2022.

What Should You Look for in a Short-Term Cash Investment Program?

  1. Stability
    Short-term investments don’t fluctuate too much in value, unlike longer-term investments like stocks and many bonds.
  2. Liquidity
    A good short-term investment typically offers high liquidity so you can get your cash out quickly when you need it.
  3. Affordability
    A short-term investment shouldn’t cost a lot of money to buy or sell, unlike more complex investment instruments.

How Does eCIO’s Cash Management Program Work?

Our experienced team of nonprofit investment advisors works with your finance committee or oversight group to evaluate whether and how much of your organization’s cash may be prudently invested to achieve income and growth. We build and manage a Treasury ladder strategy with a time horizon that matches your cash needs.

Our cash management program offers:

  • Easy Onboarding
    Setup of your account takes a few days
  • Cash Access
    Your investment account can be linked to your checking account for easy transfers
  • Detailed Reporting
    Daily view of your account balance and quarterly reporting on your portfolio
  • Oversight Portal
    Dedicated portal for your organization so you have full visibility into your investment program and regular interactions with eCIO
  • Ongoing Advice
    eCIO’s advisor team is readily accessible and proactively communicates with your oversight group
  • Low Costs
    A transparent, single fee for all cash management services*

For cash that you may need in the next several years, investing in a short-term Treasury ladder offers stability, liquidity, and low transaction costs and provides a return well above what you get in a checking account.

Reach out to the eCIO team for more information.

*Minimum cash management account value is $1 million. Annual fee starts at 0.25%, with a minimum annual fee of $5,000.

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