Bookbanks Reserves Policy
Background
Bookbanks (registered Charity Number 1204919) was registered on 26 September 2023.
Introduction
The trustees of Bookbanks undertake, amongst other things, the responsibility of considering the levels of reserves the charity should hold. They recognise holding excessive reserves may limit the amount spent on its charitable activities and the benefits it can provide; likewise, if reserves are too low, it may increase the risk of its ability to carry on its activities in the future in the event of any financial difficulties, increasing the risks of unplanned and unmanaged closure and/or insolvency.
Bookbanks has a simple organisational structure. As of June 30, 2024, it currently has no material long-term financial commitments other than its goal to operate each book stall for a minimum of one year. It has minimal tangible assets or liabilities at this stage.
Funding
The majority of Bookbanks’ funding contributes directly towards the set up and management of individual book stalls within partnering food banks. It comes from a range of funders – from organisations to individuals - some of whom ringfence their grant or donation for use at particular sites or for particular purposes, some of whom do not. Funding receipt timelines vary between funders.
Reserves Strategy
Reserves are needed to ensure the sustainability of Bookbanks’ mission, meeting its financial obligations as and when they become due. Requirements are predominantly to assist with the unexpected peaks and troughs of cash flow; any unforeseen operational costs; to allow time to organise alternative funding should a funder(s) withdraw their funding for any reason; to be able to react to an unplanned opportunity; and for organisational closure.
Reserves will be funded with surplus unrestricted operating funds. The trustees aim to maintain free reserves in unrestricted funds of an amount which equates to approximately three months of operational expenditure.
Reserves Position
As of June 30, 2024 Bookbanks has two stalls in operation, each with a monthly running cost of £590. The trustees have agreed £3,000 as an absolute minimum reserve, to be regarded as £0 in the charity’s bank account.
In addition, the trustees have agreed a further £2,000 buffer. When there is only £5,000 left in the charity’s bank account, the trustees expect that the primary use of this £2,000 buffer will be fundraising activities.
The minimum reserve figure of £3,000 will increase as the charity brings more sites within its scope of work.
Reserves Accounting Treatment
The reserve fund will be recorded within Bookbanks’ financial records as ‘Reserves’ and will be maintained within Bookbanks’ general bank account.
Reserves Investment
There are no immediate plans to consider investment of any reserves until they reach a material level where it would be beneficial for Bookbanks to do so.
Reserves Usage
Bookbanks’ management team will identify the need for access to reserve funds and confirm that the use is consistent with the purpose of the reserves as described in this Policy. This step requires analysis of the reason for the shortfall, the availability of any other sources of funds before using reserves, and evaluation of the time period that the funds will be required and replenished.
Authority
Authority for the use of operating reserves is held by the Board of trustees.
Reserves and Policy Review
The reserves position is reviewed regularly by the Directors and Treasurer, and further reviewed by the trustees on a quarterly basis. Should there be any material impact to the reserves position between the trustees’ reviews it will be raised accordingly to the trustees as an adhoc item and consideration given to whether an update to the policy is needed before the policy’s formal annual review.
The reserves policy and level of reserve requirement is reviewed regularly and as a minimum, on an annual basis at each year end.
Document Control
Document Name: Bookbanks Reserves Policy 2024
Policy Document Owner: Bookbanks
Document approved by: Board of Trustees
Date approved: 30 June 2024
Next review date: 31 December 2024