The federation of employment and guidance service, or FEGS, has recently gone bankrupt, and with it, brought to light the importance of cash reserves and responsible trusteeship for nonprofits. Its collapse has given pause to many nonprofits who are currently operating without any cash reserves and who have no way to reverse course if they find their operating funds in a negative or distressed position.
The board of FEGS didn't see any of the warning signs that led up to its bankruptcy, although it is unknown if that was either through gross negligence or simply by being unprepared. Other nonprofits should take note of what happened to FEGS and do their best to ensure their trustees have plans for downturns and that their endowments, however limited, can withstand negative events.
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