CHARITY RESERVES: BUILDING RESILIENCE IN 2019 Agenda Item - - PowerPoint PPT Presentation

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CHARITY RESERVES: BUILDING RESILIENCE IN 2019 Agenda Item - - PowerPoint PPT Presentation

Sep 20, 2022 142 likes •312 views

CHARITY RESERVES: BUILDING RESILIENCE IN 2019 Agenda Item Speaker(s) Nick Sladden and Hannah 9:00 Welcome and reserves overview Catchpool, RSM 9:25 Smart deployment of reserves CAF 9:45 Break Break 9:55 Investment strategy Tilney

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CHARITY RESERVES: BUILDING RESILIENCE IN 2019

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Agenda

Item Speaker(s) 9:00 Welcome and reserves overview Nick Sladden and Hannah Catchpool, RSM 9:25 Smart deployment of reserves CAF 9:45 Break Break 9:55 Investment strategy Tilney 10:15 Investor challenges Vanguard 10:35 Questions and close

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WELCOME AND BUILDING RESERVES

Nick Sladden

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Kids Company was not unique amongst charities in its low level of reserves. William Shawcross, Chair of the Charity Commission, stated that a responsible approach to reserves “is a problem for all charities”. He explained: We advise charities that they should spend their money, and at the same time they must have adequate reserves, so it is quite a hard act for them to follow

THE COLLAPSE OF KIDS COMPANY, HOUSE OF COMMONS 1 FEBRAURY 2016

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Charity Commission for England and Wales

  • CC19 Charity reserves: building resilience

(January 2016)

  • RS3 Charity reserves

(March 2003)

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Three golden rules

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Definitions and language matter

Total funds Restricted funds Endowment funds Unrestricted funds Available reserves Designated future spending Unrestricted funds used for fixed assets

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Disclosure – SORP FRS102

Amounts held at year-end for:

  • Total funds;
  • Restricted funds;
  • Designated funds;
  • Funds representing tangible fixed assets or programme related investments;
  • The balance of reserves held; and
  • Then compare with the reserves policy and explain steps required and future

activities to bring in line.

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How charities measure up?

RSM’s analysis of 66 charities shows many are struggling to deliver an effective policy. Widespread improvements are now needed. Size doesn’t matter (average scores out of 37)

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How charities measure up?

Sector variations

Relief of poverty Animals and the environment Overseas aid and famine relief Education and training Medical, health and sickness Arts and culture General charitable purposes

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STEP BY STEP GUIDE

Hannah Catchpool

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RSM Assessment

Review of latest Annual Report and Accounts from charity register or charity’s website

24 Questions Weighting Average Score Fundamentals 11 63.6 Restricted funds 3 65.7 Designated funds 4 76.5 General reserves 2 65.7 Strategy 9 69.7 Target levels 8 67.4 37 67.6

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How much?

Beneficiaries Trustees’ judgement Funding model Strategy Activity End game

Optimum level

Going concern

Could funds be spent on beneficiaries?

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Common mistakes

Careless use of terminology/ language

Poor or no explanation of designations

No link to strategy No explanation of:

  • targets chosen;
  • how to bridge

the gap

Disclosures

  • mitted

Not evident when policy was last reviewed Amounts not reconciling to the balance sheet No clearly defined section within the report

Unclear on impact of subsidiary funds

Plain English not used

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Draft policy Understand current position and agree target

Action Plan

Annual report and accounts Funding sources and financial model Review at least annually Strategic plan

Action plan

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Thank you