# Reserves Charities and voluntary organisations have a duty to use their organisation’s funds within a reasonable time of receiving them. However, organisations need to be able to secure their future, absorb setbacks, and take advantage of change and opportunity. Many provide for this by putting income aside, when they can afford to, as a reserve for future plans, or against future uncertainties. #### Thinking about reserves in uncertain times Thinking about your reserves policy is particularly important during the current cost of living crisis. Some voluntary organisations and charities had to draw on their reserves during the pandemic to keep operating, and your organisation should consider now how you may need to use your reserves to protect your work from the risk of disruption and meet your mission. ### **Why should you have a reserves policy?** We normally want to be able to show that we’re spending effectively to deliver services and achieve our goals, so it might feel harder to justify why we are putting money aside. A reserves policy can help you outline what your reserves are, how they’ll be kept, where they come from and in what circumstances you might need to use them. When outlined well, your reserves policy can: * Show donors, funders and beneficiaries how the trustees are managing the organisation’s money * Avoid any perception that your organisation is hoarding money and asking the public for funds that are not immediately needed * Help you plan ahead so your organisation is effective and sustainable * Show that you are effectively your assets to meet your charitable aims #### **Who is responsible for the reserves policy?** Your trustees should develop a reserves policy and make clear, in the annual report, a justifiable strategy for holding funds in reserve. #### **What do you need to think about?** * Consider your future strategy and use your [Risk Management Policy](https://scvo.scot/support/running-your-organisation/governance/guidance-and-templates/risk-management) to consider any risks that apply to your organisation (eg an increase in costs or a reduction in funds). This will help you work out how much it would cost if the risk occurred. * Look at what your working capital is and your spending priorities. * Reserves are often expressed in terms of future expenditure over a certain time. The trustees may wish to set a target of, say, 3-6 months operating costs, to hold in reserve. * Consider how you manage your reserves, and if you are making the most of your money. Moneyfacts has a [charity savings comparison table](https://moneyfacts.co.uk/business/charity-account/). * If your organisation has a lot of money you need to think about spreading the risk between banks in case your bank fails. The [FSCS](https://www.fscs.org.uk/making-a-claim/claims-process/charities/) offers protection for up to £85,000 of money held with a UK regulated bank or building society. If a bank collapsed then potentially you would be covered up to that amount. ### Template reserves policy Members get access to a range of additional resources, like our downloadable templates and model policies #### Not a member or supporter? [Join our community](https://scvo.scot/membership) #### Already a member or supporter? [Sign in to My SCVO](#scvo-account-modal-sign-in-or-up) [Find out if your organisation is a member](https://scvo.scot/membership/members) ### More information The Scottish Charity Regulator (OSCR) has a useful [Charity Reserves Factsheet](https://www.oscr.org.uk/guidance-and-forms/charity-reserves-factsheet). https://youtu.be/mEffBUXcVr0?t=538 This is a recording of our webinar from our [Open Door](https://scvo.scot/support/coronavirus/events/open-door-webinars) sessions about the importance of good reserves policies and action. It includes a presentation from Chiene & Tait LLP, giving expert advice on reserves. [Previous: Risk analysis & management](/support/running-your-organisation/business-planning/risk-analysis-management) [Next: Monitoring, evaluation and review](/support/running-your-organisation/business-planning/monitoring-evaluation-review) --- ## About SCVO SCVO (Scottish Council for Voluntary Organisations) is the national membership organisation for Scotland's voluntary sector. Our role is to champion the role of voluntary organisations in Scotland and to support them to do work that has a positive impact. SCVO supports members and the wider voluntary sector with all aspects of setting up and running a voluntary organisation. SCVO represents the needs and concerns of the voluntary sector to the Scottish government in Holyrood and UK government and Westminster. Through our learning and events programme SCVO offers training and development opportunities to the sector. Members access an extensive membership benefits package including specialist, in-depth, 1-to-1 guidance from our Information Services team and from professional service partners. Access to exclusive membership networks (including comms, employers, governance and policy) supports members to grow their connections, stay up to date, exchange ideas and views with peers, and learn through tailored learning opportunities. SCVO members enjoy free access to Funding Scotland Premium to stay on top of funding opportunities to support their organisation’s financial resilience. Discounts and savings on SCVO products and services (including our HR service, managed IT support, payroll service and events and training) and partner offers provide members with support to allow them to focus on delivering their organisation’s goals. Further SCVO products and services include [extensive digital support](https://scvo.scot/support/digital), a climate action resource [Growing Climate Confidence](https://climateconfident.scot), a voluntary sector publication [Third Force News](https://tfn.scot) and a voluntary sector jobs and recruitment service [Goodmoves](https://goodmoves.org). For more information on SCVO membership, visit [SCVO membership](https://scvo.scot/membership)