A Reserves Policy explains to existing and potential funders, donors, beneficiaries and other stakeholders why a charity is holding a particular amount of reserves.
A good reserves policy gives confidence to stakeholders that the charity’s finances are being properly managed and will also provide an indicator of future funding needs and its overall resilience.
The Charities SORP requires a statement of a charity’s reserves policy within its annual report. In addition, if a charity operates without a reserves policy, the regulations require this fact to be stated in the annual report.
You can find out much more here
Do small charity annual reports and accounts meet the reader’s needs?
We are reviewing small charities’ annual reports and accounts because they are the prime means by which the trustees are publicly accountable to donors, beneficiaries and the wider public for the charity’s activities and how they have used the charity’s money. Good reporting is important to public trust and confidence in both the reporting charity and the wider charity sector.
We were led us to focus on the following criteria:
- have the trustees provided us with both an annual report and accounts?
- does the annual report explain what activities the charity had carried out during the year to achieve its purposes?
- do the accounts contain both an analysis of receipts and payments and a statement of assets and liabilities and are these consistent with each other?
You can find out more details here
The Charity Commission has updated its 15 questions checklist which is a great tool to check you’ve got the basics covered, identify priorities for the coming year, and review your charity’s overall financial effectiveness.
Robust financial management is vital so charities can protect themselves against financial difficulties or abuse, and meet the needs of their beneficiaries.
There’s no better time than the start of the new financial year to assess your charity’s financial situation and financial controls, to see how you can improve them. Doing this is key to making sure that your trustees are able to protect the charity’s assets and resources.
The Charity Commission has recently updated their Charity finances: trustee essentials (CC25) guidance to help trustees and charity staff get to grips with the basic areas of financial management. It also links to more detailed guidance on a number of areas.
What Are Reserves?
Reserves are that part of a charity’s unrestricted funds that is freely available to spend on any of the charity’s purposes. This definition excludes restricted income funds and endowment funds, although holding such funds may influence a charity’s reserves policy. Reserves will also normally exclude tangible fixed assets such as land, buildings and other assets held for the charity’s use. It also excludes amounts designated for essential future spending.
Reserves also exclude funds which have particular restrictions on how they can be used. Trustees should consider for what purpose restricted funds are held and how they are being used in order to identify those resources that are freely available to spend.
You can find out much more about Reserves here
Our Spring Newsletter has arrived, and should be with you very soon. If you have not received your copy by 27th April 2017, please let us know here, and we will send one out to you as soon as possible.
Read our online version by clicking here
Rules for Charity Meetings
Your charity’s governing document should say how and when you should organise meetings and how to vote on decisions. You must do these things exactly as the governing document says. If you don’t, any decision you make during a meeting could be invalid.
If your governing document isn’t clear about meetings, you should think about adding to it (or agreeing extra rules). For example:
- who can attend the meetings (most meetings are just for the trustees)
- how often and when you should hold meetings
- the minimum number that must attend a meeting so that decisions can be made properly (called the quorum)
- how you deal with charity trustees who have a conflict of interest
Having the right rules in place for meetings will help you to make decisions effectively, manage conflicts of interest appropriately and deal with problems.
Your charity’s objects or purposes, and the rules for how it should operate are set out in its Governing Document.
Only change your governing document if it’s in your charity’s best interest to do so. For example, if:
- your charity’s purposes aren’t a practical or appropriate way to meet the need it was set up for any more
- your governing document doesn’t say who your charity’s trustees are or how they are appointed
- provisions explaining how you must run the charity (for example, how to arrange meetings) are no longer relevant or practical
As trustees, you’ll need to decide that the change is necessary and what it should be. You can make some changes yourself but others need Charity Commission permission.
More detailed information can be found here
About Charity Trustees’ Annual Reports
Your trustees’ annual report helps people understand what your charity does, particularly potential funders and beneficiaries.
You need to write a trustees’ annual report if your charity is registered in England or Wales. Along with your accounts, the report tells people:
- about your charity’s work
- where your money comes from
- how you’ve spent your money in the past year
More information and examples of Trustees’ Reports can be found here