Each group will need to decide on that balance, and their decision may change as their programs change. For example, a group about to launch a capital campaign may want to have more money than usual saved in case their annual fundraising declines while the capital campaign is in progress. A group with uncertain government funding will probably want more of a reserve than a group with a stable and growing individual donor base. Organizations need to think of other measurements of security than just money in the bank or in the pipeline. For example, if you have a solid, loyal base of donors, this is a group you can turn to if you suddenly need money.
Donors yield money with more certainty and predictability than almost any investment.
Many groups have opted to open lines of credit at their banks instead of having large savings accounts. They create a policy that specifies both that the line of credit is only to be used in extreme circumstances and how it will be paid back. This strategy allows a group not to have to accumulate so much money in a reserve fund, while providing a cash-flow infusion if desperately needed. When you look at your mission, you have to think about how you want to be remembered. For example, a free clinic with a year's funding in reserve hired a new director.