1. Purpose
The purpose of this policy is to establish guidelines for the management and utilization of financial reserves held by Esharelife Foundation to ensure the organization’s financial stability, sustainability, and ability to fulfil its mission over the long term.
2. Definitions
Financial Reserves: Funds set aside by the charity to mitigate financial risks, ensure operational continuity, and support strategic initiatives.
Board of Trustees: The governing body responsible for overseeing the organization’s financial affairs and strategic direction.
3. Principles
Prudence: Financial reserves shall be maintained at levels that are prudent and sufficient to address unforeseen circumstances, economic downturns, or other risks that may threaten the organization’s financial health.
Transparency: The organization shall provide regular updates to the Board of Trustees and stakeholders regarding the status of its financial reserves, including the rationale for maintaining specific reserve levels and any planned uses of reserve funds.
Stewardship: Financial reserves shall be managed responsibly and in accordance with the organization’s mission, values, and strategic priorities.
Accountability: The Board of Trustees shall oversee the establishment, implementation, and review of this policy, ensuring that it remains relevant and effective in guiding the organization’s financial decisions.
4. Reserve Levels
Minimum Operating Reserve: The organization shall maintain a minimum level of financial reserves equivalent to £3,000. This reserve is intended to cover short-term cash flow needs and ensure uninterrupted operations during periods of financial uncertainty.
Strategic Reserve: In addition to the minimum operating reserve, the organization may establish a strategic reserve to fund special projects, capital investments, or other strategic initiatives aligned with its mission and long-term goals. The size of the strategic reserve shall be determined based on the organization’s strategic plan, risk assessment, and fundraising capacity.
5. Use of Reserves
Emergency Situations: Financial reserves may be used to address emergency situations, such as natural disasters, economic crises, or unexpected financial setbacks, that threaten the organization’s ability to fulfil its mission.
Strategic Investments: Financial reserves may be utilized to fund strategic investments or opportunities that enhance the organization’s capacity, effectiveness, or sustainability over the long term.
Operational Needs: Financial reserves may be tapped to cover temporary cash flow shortages or unplanned expenses that cannot be met through regular operating revenue.
Board Approval: Any withdrawal of funds from the financial reserves shall require approval by the Board of Trustees, with consideration given to the organization’s financial condition, mission impact, and long-term sustainability.
6. Monitoring and Review
Regular Review: The Board of Trustees shall review the organization’s financial reserves and this policy on a regular basis to ensure that reserve levels remain appropriate and consistent with the organization’s financial goals and risk tolerance.
Annual Report: The organization shall include information on its financial reserves, including reserve levels, usage, and replenishment efforts, in its annual financial report to stakeholders.
7. Compliance
Compliance with Law: The organization shall comply with all applicable legal and regulatory requirements related to the establishment and management of financial reserves.
Auditing: The organization’s financial reserves and compliance with this policy shall be subject to periodic audits by independent auditors to ensure transparency, accountability, and adherence to best practices.
8. Amendments
Policy Updates: This policy may be amended or revised by the Board of Trustees as needed to reflect changes in the organization’s financial circumstances, strategic priorities, or regulatory requirements. Any amendments to the policy shall be communicated to stakeholders in a timely manner.