Reserves - the funds a charity keeps in reserve - can strengthen a charity’s resilience against, for example, drops in income or the demands of a new project.
It is important for charities to have a policy explaining their approach to reserves. There is no single level or even a range of reserves that is right for all charities. Any target set by trustees for the level of reserves to be held, or decision that there is no need for reserves, should reflect the particular circumstances of the individual charity and be explained in the policy.
This guidance explains:
(Source: Charity Commission)