Unrestricted funds crucial, charities told

Charities must be wary of the risks caused by a lack of unrestricted funds, finance directors have been warned.

Don Bawtree, head of the national charity unit at accountancy firm BDO Stoy Hayward, told delegates at a Charity Finance Directors' Group conference last week that charities should make conservative estimates about how much money they had in unrestricted funds.

"Charities might think they have funds to cover a project, but they may need to allocate more money to cover redundancies if that project's funding ends, for example," he said.

"A lot of charities make assumptions about what is unrestricted - but they need to make closer calculations."

Charles Nall, chair of the CFDG, said: "Restricted income is the vast majority of money for many small charities, but it can't always cover something unexpected happening.

"With unrestricted funds likely to become more scarce, charities must make sure they are exceptionally alert to the possibility of anything going wrong."

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