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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); and
  • arrangements for monitoring and reviewing the policy.

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 appropriate process.

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.

For further information, please email info@sorpaid.com or complete our Enquiry Form

 

 
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