Why is a reserves policy important and how should it be developed?

There is no single method or approach to setting a reserves policy. 

The approach will vary but will involve a number of factors as articulated through the Charity Commission six step guidance on reserves framework:

01

Understanding the nature of charitable funds held

02

Identifying functional assets

03

Understanding the financial impact of risk

04

Reviewing sources of income

05

Impact of future plans and commitments

06

Agreeing a reserves policy

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