Page 165 - Demo

Funds which are available as free reserves i.e. those unrestricted funds not designated for speci c purposes or otherwise committed, are shown on the balance sheet as general funds and amount to £895,759 (2015 - £279,228).
It is the trustees’ aim to ensure that suf cient funds are generated to be able to provide a proper level of care for sisters of all ages as they need it, while maintaining support for the active sisters who continue to generate low levels of income in badly needed ministries. The charitable company is reliant on investment income necessary to meet both current and future requirements. To this end, regular meetings are held to ensure that suf cient funds are generated from the investment portfolio and changes are made to the portfolio when appropriate.
The trustees consider that, given the nature of the charitable company’s work, the level of free reserves should be suf cient to generate enough income
to cover approximately one year’s on-going expenditure and to provide
for contingencies, unevenness in future income and volatility in the value
of investments. At the date of the balance sheet the trustees believe the charitable company’s free reserves to be adequate but not excessive.
Example - reserves policy and nancial position
Reserves policy
The trustees have examined the requirement for free reserves i.e. those unrestricted funds not invested in tangible xed assets, designated for speci c purposes or otherwise committed. The trustees consider that, given the nature of the charity’s work, the level of free reserves should approximate to between nine and 15 months’ expenditure. The trustees are of the opinion that this provides suf cient exibility to cover temporary shortfalls in incoming resources due to timing differences in income ows, adequate working
capital to cover core costs, and will allow the charity to cope and respond to unforeseen emergencies whilst speci c action plans are implemented.
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