Janet S. Sweet

Senior Consultant

Strategies for Institutions to Manage Excess Cash

“Is our money safe at the bank?” Until recently, that question probably has not kept you up at night. However, unprecedented times tend to shuffle priorities, and, with the recent bank failures of Silicon Valley Bank and Signature Bank, clients and others are asking us more and more often “How safe is our money?” and “Should we be doing something?”


While there are several factors to consider when answering these questions, the best solution for your organization requires consideration of the risks, the consequences of various outcomes, the reasonableness of the solution, and the ability to effectively execute the decision.


Should you be doing something? The answer comes in two parts: Yes and Maybe.

The Yes

First and foremost, only work with banks that are well-capitalized, financially stable, soundly managed, and FDIC-insured. And remember that ongoing monitoring of your bank and the services received is just as important and the due diligence conducted to select the institution in the first place.


Regularly evaluating financial statements, reviewing the number and types of depositors, and knowing metrics such as the loan to deposit ratio are prudent ways to identify potential concerns. Further, evaluating relationships and comparing services and costs with other banks often results in better service or reduced fees. Regular due diligence will ultimately encourage you and your bank to stay abreast of potential solutions arising from changing situations.


To determine if your bank is FDIC insured, you can ask your bank directly or refer to the BankFind tool provided by the FDIC on their website.1 BankFind allows visitors to confirm the FDIC insured status and provides details of the institution’s history and organization.


Second, determine how much capital is at risk and for what length of time. While personal account holders find that several accounts may each be covered up to the $250,000 limit, the coverage limits for corporations, both for-profit and non-profit, are determined by totaling all deposits owned by the organization at the same bank (e.g., checking accounts, savings accounts, money market accounts, and CDs) and insured up to $250,000 total.2 Amounts over $250,000 per bank represent your organization’s exposure to loss in the event of a bank failure.


Occasionally, we see organizations that use multiple accounts at the same bank for different purposes. For example, an organization may choose to use different checking accounts to segregate restricted pools from operating funds or hold a CD for money that is not immediately needed. The result of using these various accounts may make the total capital exposed at the bank less obvious.


Another example might be a non-profit that receives a large recurring grant that is spent gradually, resulting in varying exposure through time. Because the risk is not always obvious or easy to assess, at a minimum, we recommend periodically monitoring balances and cash flows to understand and quantify how much money might be at risk.

The Maybe

If you find that your organization is in a situation where the risks of excess bank balances should be managed, there are several options for action. The following are some solutions to consider along with some pros and cons to each approach.


Multi-bank Solution: Use more than one FDIC insured bank and monitor amounts close to $250,000 per institution.
When to consider a multi-bank solution:

  • High degree of certainty of when cash will be needed.
  • Organizational ability to manage multiple banking relationships and money movement.
  • Amounts of excess cash can be divided between a reasonable amount of banks (2 to 4).

  • FDIC insures a larger amount of cash.
  • More banking relationships increases likelihood of benefits and services offered to the organization.
  • Straight-forward deposit accounts, generally easy to report on.

  • Operational challenges to maintaining multiple deposit accounts across many banks.
  • Money transfers between banks may not be eligible for withdrawal on the same day.
  • For large amounts of cash, it may not be feasible to divide money between banks.
Bank Networks: Excess cash is spread among many FDIC insured institutions in amount of $250,000 or less but reported to the client on one statement.
When to consider bank networks:

  • High expected excess cash balances.
  • A high level of confidence in cash needs and timing.
  • A desire to hold assets at FDIC insured banking institutions.

  • Can typically work with the existing bank to access.
  • Multiple liquidity options: demand accounts, money markets, or CDs.
  • Transparency on where deposits are held.

  • Generally offered at rates lower than traditional bank accounts.
  • There may be hidden fees not associated with direct deposit at a bank.
  • Money may not be available for immediate withdrawal.
Money Market Mutual Funds: Fixed income mutual funds that invest in debt securities of short maturities and minimal credit risk.
When to consider money market mutual funds:

  • Potentially higher yields than bank money market funds.
  • Ability to hold cash securities in a brokerage account.
  • Generally available next business day.

  • Government money market funds invest primarily in US government securities and securities collateralized by US government or cash.
  • Underlying govt holdings backed by US government.
  • Can offer higher yields than bank money market funds.

  • Not insured by FDIC.
  • No guarantee of $1.00 NAV.
  • May require more coordination in moving money from brokerage account to bank account for withdrawals.
Treasury Bills: Short term debt obligations backed by the full faith and credit of the US government.
When to consider treasury bills:

  • Investors who desire to maximize yield based on expected spending.
  • Investors who desire the highest level of safety of their investments.

  • Extremely low-risk.
  • Highest degree of safety – backed by the US government.
  • Can structure maturities to meet expected cash flow needs, thus maximize return.

  • Requires reinvesting securities upon maturity.
  • Must be held to maturity to realize full value.
  • If sold prior to maturity, the investment is subject to market pricing that may be at a loss.
Brokered CDs: CDs issued by banks, sold through brokerage firms for purchase by clients. Offer fixed interest and specific maturity dates.

  • FDIC Insured up to $250,000 per bank offered CD.
  • Many insured CDs can be held in one brokerage account.
  • Offer greater liquidity and typically higher rates than bank CDs.

  • Similar to bank CDs, brokered CDs must be held to maturity to be fully redeemed.
  • If sold prior to maturity, the investment is subject to market prices which may be at a loss.


Of course, the option of staying put is also on the table and could be a viable choice for certain situations. If this is the preferred approach of your organization, you should document this as an intentional decision along with the factors taken into account to determine that staying put was the most prudent course. Remember, as fiduciaries, the determination of prudence is not based on the outcome but rather the choices made given the facts and circumstances at the time of the decision.


Do Nothing: Continue holding deposits at one, FDIC insured bank.
When to consider doing nothing:

  • Amounts held over $250,000 are temporary.
  • High level of confidence in the bank’s solvency.

  • Operational ease.
  • Seamless transfer of money from one account to another.
  • Certain benefits provided large banking relationships.

  • Assets over $250,000 are not insured by FDIC.
  • Responsibility lies with client to closely monitor the stability of organization.
  • Reputational risk to donors if adverse event occurs and is perceived to be poorly managed.


“How safe is our money?” “Should we be doing something?” These aren’t new questions, and non-profit leaders have been kept awake pondering these questions before. Working with a strategic partner can help identify and manage multiple risks while conducting the monitoring, evaluation, and negotiation of services to alleviate burdens on your team. Goelzer happily assists our clients in this way and is willing to help your organization navigate questions such as these as well.



1 “BankFind Suite: Find Institutions by Name & Location,” banks.data.fdic.gov/bankfind-suite/bankfind.


2 “Are My Deposit Accounts Insured by the FDIC?,” www.fdic.gov/resources/deposit-insurance/financial-products-insured/index.html, April 12, 2023.


DISCLAIMER: This report includes candid statements and observations regarding cash management strategies; however, there is no guarantee that these statements will prove to be correct. Actual results may differ materially from those we anticipate. The strategies described in the piece may not be suitable to all readers and are subject to change without notice. The information is not intended to provide and should not be relied on for accounting, legal, and tax advice or investment recommendations.


ABOUT GOELZER: With over 50 years of experience and more than $2.5 billion in assets under advisement, Goelzer Investment Management is an investment advisory firm that leverages our proprietary investment and financial planning strategies to help successful families and institutions Dream, Invest, and Live.