Advice on reserve policies
A formal policy on reserves by charities is required
by the Charity Commission and is an integral part
of good charity governance. See the Charity
Commission's guidance on reserves policies.
In Booklet CC19, the Charity Commission say:
The policy should cover as a minimum:
- the reasons why the charity needs reserves;
- what level (or range) of reserves the trustees
believe the charity needs;
- what steps the charity is going to take to establish
or maintain reserves at the agreed level (or range);
- arrangements for monitoring and reviewing the
The Charity Commission stress that the amount of
time spent preparing the policy, and the detail with
which it is set down, should be in proportion to the
scale and complexity of the charity's affairs.
The Charity Commission state ‘ Without a reserves
policy trustees cannot be confident that their reserves
level matches the charity's needs at the time. The
charity could be holding reserves that are too high
or too low for its needs. If a charity's reserves
are too high, it is retaining income funds without
justification. Those funds ought to be expended for
charitable purposes. While the funds remain in the
trustees' hands the charity's current users or beneficiaries
- actual or potential - are not being as well-served
as they could be.
Good practice requires the development of a formal
reserves policy and arrangements for monitoring and
reviewing the policy.
The process of developing a relevant policy should
be varied to meet the circumstances of the particular
charity, but even a small charity should adopt an
Peter Brown & Co can help both small and large
charities develop and implement an appropriate policy
and process that is relevant to their particular needs.
As with all our services, our fees are highly competitive.
Our offices are set in a rural location, and therefore
we have low premises overheads. This means that we
are able to offer the highest quality services, very
often at the lowest price.
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