Charity Reserves table 1

Operational improvement

Working capital optimisation

Value creation

We bring clarity to complex situations. Our operational improvement team work with businesses who wish to improve profitability and implement lasting change.

Working capital is the life blood of a business – optimising working capital and active management of cash are key to business success. That’s where we come in.

When a company is in need of a strategic assessment, whether this be due to underperformance or it nearing the end of its life-cycle, we help our clients by identifying the optimal way forward.

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However, our review has found significant variations in methodologies for calculating reserves. When we recalculated the general reserves to reflect actual, undesignated, liquid assets, the final figure was just £1.5bn. This is £2.2bn less than the charities reported. The single biggest issue is the inclusion of fixed assets which accounts for £2bn of the discrepancy.

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Other funds (including designations)

General/unrestricted/free

3,752

1,524

(2,228)

Retained in subsidiary

736

713

Revaluation reserve

638

818

179

Fixed asset reserve

973

3,264

2,291

Pension reserve

(818)

(846)

(28)

“Operating”/”contingency” reserves

561

513

Any other funds not described as designated

1,327

679

(648)

Any other Designated funds

793

(793)

Total unrestricted funds

6,737

Charities

BDO

Difference

Comparison of charities free reserves reported in accounts and BDO’s calculation – by sector (£m)

Comparison of charities free reserves reported in accounts and BDO’s calculation (£m)