Charities can use their savings more creatively, says report from the Charity Finance Group, Acevo, the Institute of Fundraising and Sayer Vincent
Charities could make better use of their financial reserves, according to a new publication produced by a group of voluntary sector umbrella bodies.
"Many trustees and senior managers tend to be risk-averse and cautious – supporting the retention of larger reserves," the report says. "While this is prudent to a certain extent, charities should question whether it could be beneficial to be more ambitious and take a more commercial view.
"Reserves can be used as drivers for change – to gain access to new streams of funding or increase fundraising activity, or used creatively to support the charity’s strategic aims through programme-related investment.
"Charities should also consider whether there might be other ways of covering risk rather than holding funds in reserves – through pooling reserves, for example."
Caron Bradshaw, chief executive of the CFG, said in a statement accompanying the report’s launch that many charities were confused about how best to use reserves.
"Traditionally, reserves have tended to be viewed as something for a rainy day," she said. "It's been a really tough economic climate for the past few years and this has prompted many finance professionals to challenge these traditional views."