Finance
Reserves policy
Formal definition
A reserves policy explains how much unrestricted reserve a charity should hold and why that level is appropriate for risk and continuity.
What this actually means for you
Leadership should set a clear target range and update it when risk, contracts, or income concentration changes. In practice, this is how reserves policy should be applied in your charity.
Example: Trustees set a minimum of three months operating costs after reviewing payroll exposure and contract dependency. This example shows reserves policy in day-to-day use.
Related guides and whitepapers
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