Solution Chapel International Reserves Policy
Policy Number: 24
Responsibility: Financial Stewards
Date Issued: May 2024
Review Period: 4 Years
Next Review Date: May 2028
Purpose
The Charity Commission requires that the Managing Trustees of every charity establish and record
a reserves policy for the charity. The term “reserves” means those unrestricted funds which could
be available for use quickly to meet an emergency. The reserves policy must be included in the
annual report accompanying the accounts.
Principles
The Trustees of Solution Chapel International recognise that reserves are needed to manage cash flow delays where income arrives later than expenditure. Cash in the bank at any one time is normally sufficient to cover such delays. The Trustees will regularly consider the levels of current and
expected income and expenditure and assess the level of cash reserves required to meet any
shortfalls in cash receipts over payments. The Treasurer is authorised to accumulate a sum
equivalent to between one month and two months’ mortgage as unrestricted reserves and
undesignated Funds. In practice this amounts to the reserves held.
In addition, subject to the approval of the members, the trustees may accumulate funds from any
surplus of the previous year, for specific purposes. The Treasurer is required to report the amount
remaining in those designated funds formed by surpluses from the previous year at each Trustee’
Meeting.
Procedure
At the time the budget is set for the next financial year, the Trustees will consider the use of any expected surpluses of the current financial year, in particular the designation of
funds for specific purposes.
At the time that the budget is set for the financial year, the Trustees will consider the level
of reserves to be held to cover any expected cash flow delays as well as potential emergencies where significant expenditure may be required before additional income can be raised. The budget for the forthcoming financial year presented to the members for approval will include details of the level of reserves assessed by the Trustees to be required for the financial year, and any proposed designation of surpluses to be carried forward for specific purposes. If the amount of unrestricted reserves held exceeds the level assessed as required, the Trustees will develop and present to the members a plan for using these excess reserves
in a way that fulfils the charitable objectives of the church. The amount of unrestricted reserves held and the amount in the restricted Building Fund will be included in each financial report prepared for the Trustees’ business meetings and presented regularly in Members’ Meetings.