Reserves Policy

RESERVES POLICY

1. Statement
The Policy in its current form has been written to support the running of the present hall and to take into account the building of a new village hall in Cullingworth. The policy must be reviewed following any significant change in financial circumstances and as a minimum annually. A full reconsideration of the policy must be undertaken upon completion of the new hall.
Income reserves are described by the Charity Commission as the resources the charity has or can make available to spend for any or all of the charity’s purposes, once it has met its commitment and covered other planned expenditure.
There are two types of reserves 

  1. Unrestricted reserves, which are held to offset risks, and
  2. Restricted reserves, which are raised or held for specific future purposes;  

We may also have designated funds which is an administrative act when we earmark some of our unrestricted funds for a particular project or use.

2. The reasons why we need reserves
We are required to meet the Charity Commission’s “Charities’ Reserves” Policy, CC19 and “Statement of Accounting Practice – Accounting and Reporting By Charities (SORP 2000)”, which require us to establish a Reserves Policy which needs to be included in the “Trustees Report and Annual Accounts” for each year end.
We consider the following when planning for our level of reserves:

Unrestricted reserves for ongoing maintenance and breakdowns
We will use our running surplus of £5000 to cover regular operating costs, manage cash flow, cover emergencies such as boiler/heating breakdown, pay for new purchases/acquisitions or to set aside for a particular project.
This will be maintained as a minimum balance on our current account.

Restricted Reserves for infrequent maintenance costs and asset replacement
In order to maintain the facility in good condition for the benefit of all hall users and to meet conditions of our Insurance Policy and Premises Licence we need to undertake major maintenance and suchlike activities on a regular but infrequent basis. Such expenses are normal operating expenses and will be undertaken using the operating surplus of £25,000 maintained in the United Trust account. This fund is a contingency to cover any major unforeseen circumstances in the old hall and then again as a contingency for the new hall. If accessed efforts should be immediately put into place to restore the balance to £25,000.
Infrequent Maintenance and suchlike activities include:

  • Internal redecoration of the whole building
  • External redecoration 
  • Floor refurbishment  
  • Electrical certification including emergency lights certification
  • Car park repairs
  • Snagging new hall, unforeseen new hall expenses/outgoings

Grants received for specific purposes will be evidenced in a restricted reserve “pot” within the accounting structure and used solely for the purpose designated. 

Designated Reserves:
Funds earmarked for the building of the new Village Hall are deposited in the Virgin Money Instant Access account and Virgin Money 120 day notice account.
Reasons why we need reserves:
Resources are vital to support the hall’s ability to operate and to the long-term viability of the hall and to its ability to achieve its aims and objectives. They are also vital to enable the hall to meet its legal and contractual liabilities should the organisation have to close. 

The Management Committee understand the principles behind the Reserves, setting out appropriate levels of reserves based upon risk assessment, which is based on factors which impact upon the hall.
We will continue to build on our restricted reserves as a contingency to safeguard the management of the new hall and to meet the as yet unknown running costs.
The Treasurer and Management Committee are responsible for keeping the policy up to date and it shall be reviewed annually or upon significant change in financial circumstances.