We all want to do the best we can for our beneficiaries, and we want as much of our precious income as possible to go to helping those we support – after all, it is not our money we are spending; it is money entrusted to us by others for a particular purpose. As much as we’d like it to be otherwise, we still have to spend our funds on the boring everyday stuff like heating, lighting, insurance etc, but we also need to put money aside for a proverbial rainy day – or if recent experience is anything to go by, a rainy couple of years. This money, our reserves, sustains us through the challenging times, provides cash-flow for our projects (especially if paid in arrears) and should the worst come to the worst, allows us to close down our organisations safely and securely, meeting all our obligations to others.
Given the importance of our reserves, it is quite worrying that according to NVCO, almost one in three registered charities did not hold reserves in the financial year 2018/19. Since then, we’ve had Covid, and the capacity to fundraise for many, many organisations has been decimated, especially those that rely on public fundraising. Those with robust reserves have been far more likely to survive the lean times we are experiencing; those that don’t are likely to be the ones that have to close their doors, possibly for ever.
If you don’t have a policy on how to create and manage your reserves, can I recommend the training in the newsletter below? It will be worth it if it helps you get through the tough times ahead.