Page 83 - Demo
P. 83
document allowing them to accumulate income or they must rely on implied powers. Explicit powers enabling trustees to accumulate income are not very common. Implicit powers enable trustees to set aside income for future application provided it can be justi ed and provided if in the view of the trustees, it is necessary for the best interests of the charity. Holding on to income funds without justi cation may be deemed a breach of trust.
A religious institute charity can only formulate a reserves policy after carrying out a realistic assessment of the current and future needs of the members and the wider congregation’s expectations of it based on all known facts. In doing this several things need to be taken into account including:
Forecasts of future income
Forecasts of future expenditure; and Future commitments
In assessing these areas, trustees should take into account the need to keep operating should the charity suffer a temporary loss of income or nd its work disrupted in other ways. The trustees must also take into account the need to update properties and facilities, invest in IT and the need to be able to withstand any adverse events that can be reasonably foreseen.
These aspects are best considered using a nancial planning checklist such as those set out earlier in this chapter. The assessment of future commitments needs also to be considered in the light of the statistics and data set out above in connection with the care of members.
The reserves policy itself should be in writing and cover as a minimum:
The reasons why the charity needs reserves
What level (or range) of reserves the trustees believe the charity needs
What steps the charity is taking to establish or maintain reserves at the agreed level (or range); and
Arrangements for monitoring and reviewing the policy
For many religious institute charities, the resultant reserves policy will indicate that there is a need to designate or set aside signi cant monies for the
future care of their own members. Where resources are such that the above considerations indicate that the charity’s reserves are more than adequate
Chapter 4 79
