Checklist: When to use charity reserves

By governance expert Rodney Buse

Rodney Buse
Rodney Buse

During periods of significant change and uncertainty, trustees are faced with a dilemma. Is it time to use reserves, or should resources be conserved?

Some trustees will recognise that reserves have been set aside for a rainy day. This is just the time when resources should be released if beneficiaries are not to suffer.

Other trustees may be worried about the future of the organisation. In these times of increased uncertainty, some believe that this is the time to be more prudent and not to jeopardise the future sustainability of the charity.

The need for a coherent reserves policy is critical and now might be the time to reassess priorities. It is always worth remembering that charities exist to take calculated risk. Sometimes the risk of not doing something can be greater than the risk of inappropriate prudence.

Trustees may need to reflect very carefully if reserves are greater than a reviewed reserves policy dictates.

They should ask critical questions of themselves and assess whether they really are meeting the needs of their beneficiaries at a time when those needs might be great.

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