FINANCE NEWS: Smaller charities 'better at keeping reserves'

Mathew Little

Smaller charities appear to be in better financial health than their larger counterparts, according to a new report from the Charity Commission.

Small charities and reserves, a Commission regulatory report published last week, found that the vast majority of charities with income of less than £10,000 a year - 78 per cent - had reserves at the level they had planned for.

This compares to 58 per cent for larger charities, a figure which was revealed in an earlier Commission report published in the spring (Third Sector, 26 March).

Only 10 per cent of smaller charities have reserves of less than their planned level, which contrasts with one in three of their larger cousins.

Eight per cent of smaller charities actually have more than they need.

Because many small organisations do not have stock market investments, they appear to have been spared the turmoil that has affected much of the sector.

But the report also finds 83 per cent of smaller charities do not have a reserves policy. Some small charities do not have any reserves, but half of those that do, have no reserves policy.

Rosie Chapman, director of policy and strategy at the Charity Commission, said: "There are almost 100,000 small charities in England and Wales, making up the majority of charities. Many small charities do not have any reserves. Nonetheless, it's worrying that only 17 per cent had a reserves policy at the time of the survey.

"Whatever their income, all charities need to make sure they have a clear policy to account for their practice - whether or not they are currently in a position to build a reserves fund.

"Small charities don't always stay small, and having a reserves policy will help them maintain their current services and plan for the future."

The report found that 46 per cent of charities which had a reserves policy undertook the provision of financial assistance. Of those which had a reserves policy, 46 per cent provide services.

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