Developing A Reserves Policy

Charity ReservesThe following 3 questions are designed to help guide trustees of smaller charities through the issues that need to be considered when developing their reserves policy.

Question 1. Why might you need reserves for the charity to be effective?

The basis of a good reserves policy is thinking through exactly why you might need to hold back some funds as reserves.  If you conclude that your charity does not need to hold any reserves, then you must explain that in your annual report.

Question 2. How much do you need in reserve?

The reserves level may be a target amount or a target range.  Any financial risks you identify should influence the amount of reserves you target to hold and be explained in your reserves policy.

Question 3. Have you got any funds in reserve at the end of the year?

The final step is to compare what you might need in reserve with what you actually hold.  Where the difference is small, no action may be needed.

Information about the reserves policy and the level of reserves held must be included in the trustees’ annual report.

More detailed information and advice can be found here in Annex 1

From The Charity Commission: How We Identify Risks

Charity Commission LogoTo achieve our purpose and fulfil our statutory functions, we are risk-led in our regulation, which means:

  • being proactive in identifying risks and intervening, where possible, to prevent harm before it occurs
  • addressing harm effectively where it occurs
  • focusing our resources effectively on the highest risks

How we identify risks

We identify risks from a wide range of sources including, but not limited to:

  • information charities include in their annual return and accounts
  • serious incident reports from trustees
  • reporting by auditors and independent examiners
  • reports of serious wrongdoing in charities from employees and volunteers, including whistleblowing
  • complaints from the public or public sources
  • our engagement with charities
  • our work with other bodies, departments and agencies
  • concerns raised in the media and by members of parliament

We place an emphasis on being proactive and identifying risks as soon as possible. To achieve this we:

  • identify trends to get a better understanding of the evolving threats and risks to the ability of charity to thrive and inspire trust and confidence
  • analyse the data, information and knowledge that we gather from the sources mentioned above
  • use our awareness of changes to the environment in which charities are operating and the main challenges facing the charity sector

How we respond to risks

Our approach is underlined by our general functions as set out above, which include:

  • determining whether institutions are charities
  • encouraging and facilitating the better administration of charities
  • identifying and investigating apparent misconduct or mismanagement in the administration of charities and taking corresponding remedial or protective action

We will prioritise our casework resources towards addressing the highest risks, those which have the potential to cause the highest level of harm to public trust and confidence, or which may affect trustees’ ability to comply with their duties.

The level and nature of some risks will be such that it would not be proportionate to use our resources to undertake direct regulatory action or engagement with the charity. However, this does not mean that we do not want to be notified of these risks. Whilst we may not take regulatory action, we may still contact a charity’s trustees to alert them to the concerns raised with us. We may keep such information in our records and reassess our response if further information comes to light. We will also use the information to inform our wider understanding of risks. This may result in actions that deal with risk in a thematic way, for example publishing a report of our overall findings or issuing a regulatory alert to all or a relevant category of charities.

There will be some limited cases where the level and nature of risk identified means that another regulator or agency is better placed to respond, for example serious criminal matters. In such cases, we will work with the other regulator or agency to ensure the appropriate response.

An increased level of Commission involvement with a charity or on an issue does not necessarily mean that something has already gone wrong. It may simply mean that a risk requires a greater regulatory involvement or scrutiny.

Since the nature and level of a risk may change during the course of a particular case, we may need to periodically review our response.

You can read more here

Changes to the Coronavirus Job Retention Scheme from July 2021

COVID 19 Latest - Doyle ClaytonFrom 1 July 2021, the level of grant will be reduced and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The table below shows the level of government contribution available in the coming months, the required employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

  May June July August September
Government contribution: wages for hours not worked 80% up to £2,500 80% up to £2,500 70% up to £2,187.50 60% up to £1,875 60% up to £1,875
Employer contribution: employer National Insurance contributions and pension contributions Yes Yes Yes Yes Yes
Employer contribution wages for hours not worked No No 10% up to £312.50 20% up to £625 20% up to £625
For hours not worked employee receives 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense

Inducting New Staff

New Employee ChecklistACAS offers some good advice for employers on how to settle in a new employee once they have accepted a job offer.

They suggest that you use a checklist to ensure that both the new employee and their line manager know what has or has not been covered at any given time.

They both need a copy, which should be kept up to date, so they can follow what is happening.  It can also act as a reminder of anything that needs particular attention.

While a checklist is helpful, it should not turn the induction into a tick-box exercise.  It should be the responsibility of both management and the new starter to ensure all items are properly covered.

The checklist is often drawn up by the employer’s HR department in consultation with other staff involved, such as a safety officer, line manager/supervisor, employee representative and training officer.

A sample checklist, which is free to download and use, can be found here

The ACAS guide to induction can be found here