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Umbrella bodies collaborate to advise on best use of reserves

Keith Hickey, group director of resources, RNIB
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Umbrella bodies collaborate to advise on best use of reserves

Finance | Jonathan Last | 22 Jun 2012

CFG, Acevo, the Institute of Fundraising and Sayer Vincent today launched a new publication on how charities can better manage their reserves.  

Beyond Reserves is co-authored by the four umbrella bodies and discusses whether reserves could be apportioned more effectively and creatively to better serve the charity and its beneficiaries.

The publication includes insights and case studies from chief executives, finance and fundraising directors from a range of organisations.

It advises that some organisations may need a fresh approach to their thinking about reserves, and that a good place to start would be to consider the business model under which the charity is operating – specifically, identifying where the risk is in the model and being clear on why the charity actually needs reserves.

Caron Bradshaw, CFG chief executive, said that the tough economic climate has pushed many charities to challenge that traditional viewpoint that reserves are “something for a rainy day".

Beyond Reserves can be found on the CFG website here from today.

CFG members' meeting

Discussion of issues surrounding reserves took centre stage at CFG’s members meeting yesterday, where publication of the new paper was announced.

Speakers included Keith Hickey (pictured), group director of resources at RNIB, who questioned to what extent charities that do not rely on the traditional fundraising model for their income actually need a reserves policy.

“Forty years ago we were in an environment of fundraising – clearly a very volatile area," he said. "The value of a reserves policy in that kind of situation is very clear to see.

“However, if we look at the last ten years, charities have grown and are contracting or trading their income. That sort of work is done by as many commercial bodies as charities – and they won’t have a reserve policy. So why do charities whose work is mainly funded in that way need to have a reserve policy? You don’t need that if you’re managing liquidity and cashflow.”

Hickey also speculated that if, as predicted in some quarters, the next few years see consolidation and more mergers in the voluntary sector, it may be heading towards a situation where charities will be managing risks over a greater portfolio and so need a lower level of reserves.

The meeting also featured presentations by Louise Smith of Acevo, Geetha Rabindrakumar of Scope, David Walter of Arthritis Care and Kate Sayer of Sayer Vincent.

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