Call for more charities to adopt a reserves policy

Only 40 per cent of UK charities have a policy that outlines how they would use their financial reserves to cover running costs if their income were to be disrupted, according to new research by the Charity Commission.

The commission has worked out that a total of £3.6bn of reserves are not properly accounted for because charities do not have such policies.

The study was based on information from charities with annual incomes of more than £10,000.

However, the commission said importance should be placed on compiling a policy - not how much money was in the reserves.

"Charities have never been more under the spotlight, and it's vital that they are open and account for their reserves," said Andrew Hind, chief executive of the commission. "They must get to grips with this issue, not least because clarity about reserves is a vital part of their plan for long-term sustainability."

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