With many charities grappling with the question of how best to handle their reserves, Laura Soley and Lucy Rhodes from our Charity & Social Enterprise team have blogged for Charity Finance Group on how organisations can respond effectively to challenges in this area.
Citing the restrictions placed on charities with respect to how they manage their reserves, Laura and Lucy provide guidance on the steps they can take to ensure they have an appropriate reserves policy in place.
Highlighting the many considerations charities need to take into account, their blog explains how many large-scale charities have adopted a risk-averse approach to this subject due to the high number of ‘black swan’ events that have emerged across the sector in recent years. The blog goes on to set out some of the ways charities can prepare for this kind of remote eventuality.
Later in their article Laura and Lucy also explain how, if charities perceive that ‘threats to its future sustainability’ may soon become apparent, they can consider other, alternative, ways of raising funds.
The authors conclude by recommending that ‘whatever proportion of its income a charity decides to hold as reserves, provided that a charity has a reserves policy which is properly considered, justified and clearly communicated, as with other financial decision, we should trust charities to be best placed to know what it right for them.’
Want to find out more about this important and topical subject? You can read this piece in its entirety by clicking here.