In the bank or on the ground : an examination of financial reserves in Australian international aid organisations

This study contributes to the understanding of the contribution of financial reserves to sustaining nonprofit organisations. Recognising the limited recent Australian research in the area of nonprofit financial vulnerability, it specifically examines financial reserves held by signatories to the Code of Conduct of the Australian Council for International Development (ACFID) for the years 2006 to 2010. As this period includes the Global Financial Crisis, it presents a unique opportunity to observe the role of savings in a period of heightened financial threats to sustainability. The need for nonprofit entities to maintain reserves, while appearing intuitively evident, is neither unanimously accepted nor supported by established theoretic constructs. Some early frameworks attempt to explain the savings behaviour of nonprofit organisations and its role in organisational sustainability. Where researchers have considered the issue, its treatment has usually been either purely descriptive or alternatively, peripheral to a broader attempt to predict financial vulnerability. Given the importance of nonprofit entities to civil society, the sustainability of these organisations during times of economic contraction, such as the recent Global Financial Crisis, is a significant issue. Widespread failure of nonprofits, or even the perception of failure, will directly affect, not only those individuals who access their public goods and services, but would also have impacts on public confidence in both government and the sectors’ ability to manage and achieve their purpose. This study attempts to ‘shine a light’ on the paradox inherent in considering nonprofit savings. On the one hand, a public prevailing view is that nonprofit organisations should not hoard and indeed, should spend all of their funds on the direct achievement of their purposes. Against this, is the commonsense need for a financial buffer if only to allow for the day to day contingencies of pay rises and cost increases. At the entity level, the extent of reserves accumulated (or not) is an important consideration for Management Boards. The general public are also interested in knowing the level of funds held by nonprofits as a measure of both their commitment to purpose and as an indicator of their effectiveness. There is a need to communicate the level and prevalence of reserve holdings, balancing the prudent hedging of uncertainty against a sense of resource hoarding in the mind of donors. Finally, funders (especially governments) are interested in knowing the appropriate level of reserves to facilitate the ongoing sustainability of the sector. This is particularly so where organisations are involved in the provision of essential public goods and services. At a scholarly level, the study seeks to provide a rationale for this behaviour within the context of appropriate theory. At a practical level, the study seeks to give an indication of the drivers for savings, the actual levels of reserves held within the sector studied, as well as an indication as to whether the presence of reserves did mitigate the effects of financial turmoil during the Global Financial Crisis. The argument is not whether there is a need to ensure sustainability of nonprofits, but rather how it is to be done and whether the holding of reserves (net assets) is an essential element is achieving this. While the study offers no simple answers, it does appear that the organisations studied present as two groups, the ‘savers’ who build reserves and keep ‘money in the bank’ and ‘spender-delivers’ who put their resources ‘on the ground’. To progress an understanding of this dichotomy, the study suggests a need to move from its current approach to one which needs to more closely explore accounts based empirical donor attitude and nonprofit Management Board strategy.

Cabin crew rostering at KLM: optimization of reserves

In this paper, we will discuss the issue of rostering jobs of cabin crew attendants at KLM. Generated schedules get easily disrupted by events such as illness of an employee. Obviously, reserve people have to be kept 'on duty' to resolve such disruptions. A lot of reserve crew requires more employees, but too few results in so-called secondary disruptions, which are particularly inconvenient for both the crew members and the planners. In this research we will discuss several modifications of the reserve scheduling policy that have a potential to reduce the number of secondary disruptions, and therefore to improve the performance of the scheduling process.

Financial Reserves : A Necessary Condition for Not-for-Profit Sustainability?

Should not-for-profit (NFP) organisations hold reserves to hedge uncertainty and protect mission delivery? This chapter outlines the nature and contxt of NFP reserves. many would accept that actors within NFP organisations have a broad accountability to ensure sustinability where an appropriate mission exists, and that sustinability is assisted or ensured through the purposeful accumulation of reserves. This chapter examins current relevant literature on reserves, reviews various approaches to reserves accumulation across jurisdictions and reports what is known about practice. We highlight the tension faced by NFP organisations, balancing mission spending against the need to hedge uncertainty. We investigate the role of reserves, and how an appropriate level is determined to ensure a NFP board's accountability for organisational sustinability. This issue is particularly significant in the period following the global financial crisis, and while practitioner interest is evident, there has been little academic attention paid to the topic of NFP reserves, and 'very few [articles] have even forcused on related topics' (Calabrese, 2011, p. 282).

Foreign-currency and monetary geopolitics of United States and its effects on the future of the international system

The US dollar is still considered as the main strategic deposit among the currencies of different countries of the world and the policies of the World Bank and the International Financial Organizations have been and will always be influenced by the US economy. Despite the economic crises and commercial balance deficits in the United States, dollar has maintained its high position in and its domination over foreign exchanges and foreign-currency deposits of the countries. The novelty of the present research relies on its consideration of the political properties of the governments and the geopolitical effects of these countries on the position of their monetary and foreign-currency policies and consequently, on the international financial organizations such as the International Monetary Fund and the World Bank, which can determine the future of international economy and the political relations among countries. Our research proves that the political development of the United States and its geopolitical situation have been of the effective factors on dollar growth; and unless the competitors acquire such a relative advantage, they will not be able to seriously challenge the currency of dollar and the monetary policies of the United States, at least in a short time

The differential impact of monetary policy announcements and explanatory minutes releases on the Australian interest rate futures market

Unlike US and Continental European jurisdictions, Australian monetary policy announcements are not followed promptly by projections materials or comprehensive summaries that explain the decision process. This information is disclosed 2 weeks later when the explanatory minutes of the Reserve Bank board meeting are released. This paper is the first study to exploit the features of the Australian monetary policy environment in order to examine the differential impact of monetary policy announcements and explanatory statements on the Australian interest rate futures market. We find that both monetary policy announcements and explanatory minutes releases have a significant impact on the implied yield and volatility of Australian interest rate futures contracts. When the differential impact of these announcements is examined using the full sample, no statistically significant difference is found. However, when the sample is partitioned based on stable periods and the Global Financial Crisis, a differential impact is evident. Further, contrary to the findings of Kim and Nguyen (2008), Lu et al. (2009), and Smales (2012a), the response along the yield curve, is found to be indifferent between the short and medium terms.

The channels of monetary policy triggered by central bank actions and statements in the Australian equity market

Owing to the discrete disclosure practices of the Reserve Bank of Australia, this paper provides new evidence on the channels of monetary policy triggered by central bank actions (monetary policy announcements) and statements (explanatory minutes releases), in the Australian equity market. Both monetary policy announcements and explanatory minutes releases are shown to have a significant and comparable impact on the returns and volatility of the Australian equity market. Further, distinct from US and European studies that find strong evidence of the interest rate, bank loan and balance sheet channels and no evidence of the exchange rate channel following central bank actions, this paper finds that monetary policy impacts the Australian equity market via the exchange rate, interest rate and bank loan channels of monetary policy, with only weak evidence of the balance sheet channel of monetary policy. These channels are found to be operating irrespective of the trigger (monetary policy announcements or explanatory minutes releases), though results are somewhat weaker when examining the explanatory minutes releases. These results have important implications for central bank officials and financial market participants alike: by confirming a comparable avenue to affect monetary policy; and providing an explication of its impact on the Australian equity market.