Charity Reserves Policy Template That Works
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A simple reserves policy template for charities that want clear rules on how much money to hold and why.
A reserves policy helps a charity explain why it holds money back and how that money is used. Without one, the board can end up making inconsistent decisions.
The best policies are short, clear and connected to the charity's actual risk profile.
What the policy should explain
A good reserves policy should answer four practical questions.
- Why does the charity hold reserves?
- How much is held and how is that level set?
- What can reserves be used for and what can they not fund?
- Who approves changes to the reserve level?
A simple structure to follow
- Set the purpose of reserves.
- Define the target level and review cycle.
- Describe the rules for using reserves.
- Set the governance steps for changes.
Useful review questions
- How long could the charity run without a new income source?
- What fixed costs would continue even in a slower period?
- Do trustees understand the trade-off between spending now and holding back for risk?
Keep it usable
A reserves policy should help the board make better decisions, not sit in a folder and be ignored. Review it regularly and update it when the charity changes.
This guide is part of our Charity Finance hub, where you can explore every practical guide in this area.
Frequently asked questions
What should a reserves policy include?
It should set out the purpose of reserves, how reserves are calculated, who approves changes, and how often the board reviews them.
How much reserve should a charity hold?
There is no single amount. The right level depends on risk, income stability, fixed costs and how long the charity could continue to operate without a new income source.
Who should own the reserves policy?
The board should approve it, but the finance lead or trustee with financial knowledge should draft and review it regularly.
Sources
External references used in this article. Links open on the original publisher’s site.
- Charity Commission: Internal financial controls for charitiesCharity Commission · Accessed 27 Jul 2026
- CC19: Charity reservesCharity Commission · Accessed 27 Jul 2026
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