Developing a reserves policy
All charity trustees have an obligation to manage their charity in the best interests of the charity and its beneficiaries. This involves managing the charity’s income, running costs, future plans and potential risks.
As part of this process charity trustees should, if appropriate, maintain a reserves fund and set out their reasons for holding such funds in a reserves policy. Developing a reserves policy will help the charity trustees to identify what level of reserves their charity should hold. Equally it can help charity trustees to decide if it is inappropriate for their charity to hold reserves. It will also enable charity trustees to explain to funders, donors, beneficiaries and the public why it holds a particular level of reserves and help ensure a better managed charity.
The guidance below is designed to help charity trustees understand what a reserves policy is and the importance of having one.