Straighten up your Reserves Policy for Successful Fundraising
Your reserves policy can have a big influence on your opportunities to raise funds. Is your reserves policy clear? Are your reserves being calculated correctly by your accountants? If you are unsure about either of these questions then you could inadvertently be damaging your fundraising prospects.
Under the Statement of Recommended Practice (SORP) charities are required to provide a clear reserves policy statement in the Trustees Annual Report. As well as being a statutory requirement, grant funders expect to see a clear reserves policy, to help inform their funding decisions. Detailed guidance is available from the Charity Commission.
Another problem that we see regularly in charity accounts, and one also cited as an issue by the Charity Commission, is the “Incorrect calculation of freely available reserves with the most frequent error being the failure to exclude tangible fixed assets held for charity use.” Including tangible fixed assets in such a way is a common practice amongst many accountants resulting in your accounts showing an artificially high figure for free reserves. When you select your accountants ensure you check they are experienced in preparing SORP compliant accounts.
