How does a charity balance the needs of today with the demands of tomorrow?
Tuesday, 19 March 2019
Welcome to month three of our publication, ‘Using Conflict as a Catalyst for Change’, a guide to help you embrace, manage and mitigate conflict within your charity. This month we focus on conflict in a charity between the needs of today with the demands of tomorrow.
So, your charity has reserves, fantastic, it gives trustees the comfort that there’s a pot of money if needed, if, say, funding is lost, or an unexpected expense occurs. However, the age-old problem arises: how much is too much, and when is it appropriate for charity trustees to use the reserve funds?
Charity trustees must balance the need to spend today to deliver your charitable objective (which is, of course, why the charity exists) with that of reserves, investment, future strategies and the continuation of the charity.
Reserves policy and good information
The charity’s reserves policy should clearly set out what level of reserves the charity should hold and why.
Once this is determined, the charity board needs relevant and timely information to make decisions about how to apply funds. A board cannot make decisions about future spending if it doesn’t know with reasonable accuracy the up-to-date level of the charity’s funds and what the future looks like, both in terms of income and expenditure.
The focus should be on quality information, not quantity.
Armed with this information, the board can make good decisions about how and when to increase or decrease spending. This month’s article explores in more depth how a charity can approach this area, when it’s a good idea to increase spending, and conversely, when it’s sensible to tighten the purse strings.
In my view, a good reserves policy, linked to the charity’s short term and long term strategy, combined with good financial information, provides the right ingredients for good decisions to be made about how and when to apply resources.
This article is from our publication, ‘Using Conflict as a Catalyst for Change’, a guide to help you embrace, manage and mitigate conflict within your charity. You can read more about this month’s topic here.
Next month we will be focusing on conflict between the charity board and the CEO.
If you have any questions or if you would like to discuss this with us in more detail, please speak to your usual MHA Larking Gowen contact. Call 0330 024 0888 or email firstname.lastname@example.org