Charity Reserves (RS3)

For trustees, consideration of the level of reserves their charity needs to hold, and how to acquire them, is an important part of planning and of sound financial management. It is also a key issue for the Charity Commission as the regulator. Reserve levels that are set too high tie up money which could and should be spent on charitable activity. If they are too low, the future of the charity may be put at risk.

Each charity's position is different and it is impossible to set a formula for reserves levels that will suit all charities at all stages of their development. Deciding how much money to hold in reserve, or how to build up reserves, is not an easy task for any organisation. But donors, beneficiaries and the Charity Commission should be able to expect that charities will have a reserves policy, and that it will be robust and fit for purpose providing clear accountability.

This report of the Charity Commission explores these challenges and makes recommendations to enable trustees to address them.