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to meet this future cost, trustees should consider also the charity’s moral obligations to the wider institute. It may be that at some point in the future monies not required in the United Kingdom may be required to make grants to the international institute. Or, perhaps there may be a desire to set funds aside to nance grant making activity to other UK charities via a grant making programme (see chapter ve).
The reserves policy for a religious institute charity and the comparison of that policy with the actual nancial position of the charity may be something along the following lines:
Reserves policy and nancial position
Reserves policy
The charity supports a diverse range of activities enabling the work of individual members of the institute here in the United Kingdom, providing care and support for the members of the institute in their daily lives, and providing nancial assistance to the international institute and its overseas missions.
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 while speci c action plans are implemented.
Financial position
The balance sheet shows total reserves of £32,895,842.
£17,800,000 represents a retirement reserve designated to provide for sisters as they increase in age. The value of the fund has been calculated using actuarial principles to provide for the institute’s sisters, but is not meant to guarantee suf cient resources. It is merely an estimate designed to recognise, and make some provision for, the nancial undertaking implicit in the relationship between a religious congregation and its members. It has been calculated using life expectancy projections published by the Of ce for National Statistics and
80 Chapter 4