Crisis Caused Changes in Intrinsic Liquidity Value in Non-Profit Institutions

Abstract

Liquid assets which nonprofit institutions holds are not a source of any special interests and although the close to cash assesses together with credit lines available for nonprofit institution are connected with resigning from realization of the part of incomes or costs, nonprofit institutions decide to hold some liquidity reserves. And not only this resulting from transactional needs, but also from precautional and speculative reasons. Investment in liquid reserves resulting from speculative demand for money may be assessed by usage of capital budgeting methods. In the paper, each of these aspects of liquidity was taken into consideration and presented from nonprofit perspective. Nonprofit liquidity value determination may often significantly contribute to the solution of working capital management problems in these institutions.

Keywords: Intrinsic liquidity value, Nonprofit financial management, financial liquidity

JEL Classification: G31, L31, M21