Page 80 - Demo

Ÿ Carry out a detailed review of the institute’s property portfolio and access future needs and their nancial implications
Ÿ Prepare a projection of salary and pension income taking into account known retirements and projected death rates
Ÿ Give serious consideration to “earmarking” or designating resources in a retirement fund to provide for future needs
WHAT ARE THE FINANCIAL IMPLICATIONS WE HAVE TO CONSIDER WHEN FORMULATING A RESERVES POLICY?
In answering this question, it is rst important to understand what is meant by a reserves policy and the purpose of such a statement.
Most charities, including religious institute charities, are very aware of the need to secure their nancial viability beyond the immediate future. In order to provide for the members of the institute and their care, in order to provide ongoing charitable work and activities including general social and pastoral ministry, religious institute charities must be able to absorb the occasional set back and plan for the future. Many such charities provide for this by setting funds aside i.e. by not spending all the funds that are available to them at any point in time. In other words, trustees “reserve” some of the charity’s funds available to them for future needs and commitments.
Over the past decade or so, there has been much discussion about the level of charity reserves – the public and the media have become concerned at times that certain charities are simply not expending suf cient amounts of the money entrusted to them and might be deemed to be accumulating or “hoarding” monies. The debate began several years ago when charities such as Guide
Dogs for the Blind and Royal National Lifeboat institute found themselves having to justify the resources they had available to them but which they were not utilising despite fundraising for more income. In more recent times, the austerity cuts and economic conditions have forced many charities to severely cut back on spending in order to ensure they had the funds required in line with their reserves policies so that they did not get into danger of insolvency. The recent Kid’s Company case has also led to questions being asked about how realistic charities are being in assessing the funds they need to hold back in order to meet day-to-day needs and provide for that “rainy day”.
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