Information for charities and the public about maintaining and spending reserves This fact sheet covers:

• What reserves are and where they come from
  
• Why it is important to have reserves
  
• Appropriate levels of reserves
  
• Who has responsibility for reserves
  

Reserves play an important role in the financial stability and long-term sustainability of a charity.  Managing reserves is an important aspect of the overall financial management of a charity – a crucial element of good charity governance. In line with good governance and proper risk management, a charity’s responsible persons (i.e., its board, committee, or governing body) should consider an appropriate level of reserves for its circumstances, as well as a strategy for building or spending its reserves in a way that is consistent with its purpose.

The purpose of this fact sheet is to provide general guidance on reserves for charities: what reserves are, why they might be needed, and how charities can determine an appropriate level of reserves.  This fact sheet is not relevant for grant-making charitable trusts and foundations that manage a corpus.

For full fact sheet, click here.