Reserves is unrestricted income that is not yet spent, committed or designated.
Having a reserves policy is a sign to funders and donors that you are following good practice and that you take financial management seriously.
Your reserves policy should include 4 things:
- A justification for holding the reserves in the first place.
- The level of reserves that it has been agreed should be held.
- The steps that you are taking to get to or maintain that level of reserves.
- The arrangements for reviewing the policy and the level of reserves.
Help with reserves policy and more
A range of services provided by WYCAS (West Yorkshire Community Accounting Service) are available to help your organisation with its reserves policy including Reserves: A Good Practice Guide. To find out more contact WYCASThe Charity Commission also provide comprehensive advice on this subject.