I heard about a small non-profit that had about two years of operating expenses sitting in reserves. Responsible, well-managed organization. The money was in a savings account earning 0.2%.

Two years of runway, doing almost nothing.

This is surprisingly common. Non-profits that are careful enough to build reserves often leave them in whatever account the bank set up when the organization was founded. The board doesn’t question it because the money is “safe,” and it is. But safe and idle aren’t the same thing.

This isn’t financial advice, and every organization’s situation is different. But the options here are worth understanding if your board is sitting on reserves that aren’t working very hard.

Start with the money you need to keep liquid

Before thinking about GICs or anything with a lock-in, the first question is how much the organization needs to keep accessible. Most non-profits aim for three to six months of operating expenses in a liquid account. That’s payroll, rent, insurance, the bills that come every month regardless of what’s happening with fundraising or grants.

That money should stay liquid. A high-interest savings account is the right home for it. Not a GIC, not a brokerage account. You want to be able to access it within a day or two if something comes up.

Everything beyond that operating buffer is what this article is about. If your non-profit has two years of reserves and six months covers the operating runway, the remaining eighteen months of cash is what’s sitting idle.

When safety becomes the default

Most boards aren’t looking to invest reserves in the stock market. That would be irresponsible for money you might need to cover payroll next quarter. The principal needs to stay intact.

But “we can’t risk the principal” somehow becomes “so we leave everything in a chequing account at 0.2%.” There’s a huge gap between equities and doing nothing, and that gap is where the surplus beyond your operating buffer should be working harder.

Three approaches worth considering for the surplus

High-interest savings accounts (HISAs)

The lowest-effort move. Open an account at an online bank (EQ Bank, Tangerine, or similar) and transfer the reserves. Rates vary, but you’ll typically see 2% to 4% depending on the bank and current rate environment.

No lock-in, fully liquid, CDIC-insured up to $100,000 per institution. The board can access the money any time. This alone would have turned that 0.2% into something meaningful.

Cash-equivalent ETFs

Products like CASH.TO (Purpose High Interest Savings ETF) or similar hold deposits at major banks and pay a competitive rate. You’d need a brokerage account, which adds a step, but the rates are often slightly better than a retail HISA.

The catch: opening and managing a brokerage account adds administrative overhead for a non-profit. Someone on the board needs to be the authorized trader. There are forms, resolutions, signing authorities. For some boards, this is straightforward. For others, it’s more process than it’s worth when a HISA gets you 90% of the way there.

GIC laddering

This is where most well-managed non-profits end up, and for good reason.

A GIC (Guaranteed Investment Certificate) locks your money in for a set term, usually one to five years, in exchange for a higher rate. The longer the term, the better the rate. The money is guaranteed by the issuing institution and covered by CDIC insurance.

The downside is that your money is locked. If you put everything into a five-year GIC and need it next year, you’re stuck. That’s where laddering comes in.

How GIC laddering works

Say your non-profit has $500,000 in surplus reserves beyond your operating buffer. Instead of locking it all into one term, you split it:

$100,000 in a 1-year GIC
$100,000 in a 2-year GIC
$100,000 in a 3-year GIC
$100,000 in a 4-year GIC
$100,000 in a 5-year GIC

Every year, one GIC matures. When it does, you renew it for five years at whatever rate is available. After the first cycle, you’ve always got one GIC maturing annually (for liquidity) while the rest earn longer-term rates.

You get the higher rates of long-term GICs without locking everything up. And each year, you have a natural decision point: renew, adjust the amounts, or pull some money out if the organization needs it.

What the board conversation actually looks like

The financial argument is easy. The harder part is getting a volunteer board to prioritize it.

Here’s what tends to work: frame it in dollar terms, not percentages. “We’re earning $1,000 a year on $500,000” lands differently than “we’re getting 0.2%.” Then show what a GIC ladder would earn at current rates. The gap is usually large enough that someone raises the question of why it hasn’t been done already.

You’ll need a board resolution to open the account and designate signing authorities. Most banks and credit unions have a standard process for non-profit accounts. It’s a bit of paperwork, not a major undertaking.

A few things to keep in mind

GIC rates change with the Bank of Canada’s rate. When rates are high, lock in longer terms. When rates are falling, shorter terms give you flexibility to reinvest when rates recover.

CDIC coverage applies per institution, up to $100,000 for GICs in eligible accounts. If your reserves are large, spread them across institutions or look into credit union deposit insurance, which varies by province but often covers higher amounts.

This is all separate from your operating buffer, which should stay liquid in a HISA as covered earlier.

What the difference looks like

At 0.2% on $500,000, you earn $1,000 a year. A GIC ladder averaging 4% earns $20,000. That’s $19,000 a year that could fund programs, cover rising costs, or just extend your runway.

For a non-profit, $19,000 is a part-time hire. A program expansion. A real difference. And none of these options put the principal at risk.

If your board hasn’t revisited where the reserves sit in a while, it’s worth raising at the next meeting. It doesn’t take much to move from 0.2% to something meaningfully better.

Investing a non-profit's reserves in Canada