This policy is written in the light of Para 1.22 of Charities SORP (FRS 102), which states “The charity must explain any policy it has for holding reserves and state the amounts of those reserves and why they are held. If the trustees have decided that holding reserves is unnecessary, the report must disclose this fact and provide the reasons behind this decision.”
Section 3.1 of the Charity Commission’s guidance document CC19, Charity Reserves, Building Resilience defines “Reserves” as “Reserves are that part of a charity’s unrestricted funds that is freely available to spend on any of the charity’s purposes. This definition excludes restricted income funds and endowment funds.”
UK Chinese Women Connect Association (UKCWC) board of trustees have decided that holding reserves is unnecessary, i.e. holding zero reserves. Whilst we have not provided for a compulsory reserves amount, the charity adopts a very conservative approach on its spending and does reserve its cash position so there is always sufficient funds available. We will continue to monitor the situation and adjust our reserves policy as required going forward. The reason for holding zero reserves is that the charity does not have committed projects, paid staff, or buildings/properties, and therefore all reserves are reported under unrestricted funds.
Due to the nature of the organisation and the regular review of the budget, this policy should be reviewed on an annual basis to ensure the policy matches changes to the annual budget and activities.