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."