Reserves Policy

The Wheel’s Reserves Policy was initially developed and adopted in 2008, updated in December 2020 and last reviewed in February 2024.

Statement of Policy

The Board has set a reserves policy which requires:

  • Reserves be maintained at a level which ensures that The Wheel’s core activity could continue during a period of unforeseen difficulty,
  • Reserves also be maintained to ensure the organisation can adapt and innovate during a period of growth or change,
  • A proportion of reserves be maintained in a readily realisable form.

The calculation of the required level of reserves is an integral part of the organisation’s planning, budget and forecast cycle.

It takes into account:

  • Risks associated with each stream of income and expenditure being different from that budgeted,
  • Planned activity level including consideration of increasing activity and increased expenditure base,
  • The organisation’s commitments

In developing and updating the policy we acknowledge guidance published by the Charities Regulator.

In categorising reserves this policy notes the main types of reserves that are relevant to The Wheel, namely:

 

Main types of reserves

Unrestricted Reserves that come from unrestricted income and are freely available for any organisational priority.
Restricted Reserves that can only be used for a particular restricted purpose as determined by a funder or source of funding.
Designated Unrestricted reserves that have been set aside by the organisation for future use on a designated activity.

Reserves level

Taking Risk Assessments outlined in Appendix A into account, it would be prudent and good governance for The Wheel to have a reserves level that would allow the organisation to continue to operate during a period of crisis or uncertainty and not force it into significantly altering staff levels, programme delivery or future activities and plans.

This is particularly important in light of the current economic uncertainty caused by inflation and any lingering impact of Covid 19.

A suitable approach is deemed to be to discount projected annual expenditure by 20% on the basis that direct costs or other savings to this level could be realised in a crisis or period of uncertainty, and to aim to set aside an amount equal to between 4 and 6 months discounted expenditure to support growth, innovation and change as well as guard against any period of uncertainty.

Based on this approach and based on budgeted expenditure for 2024, the desired range of unrestricted reserves is between €782k and €1,173k.

Reserves position and Review

The board will assess the reserves position annually to ensure they are within the parameters set by the above requirements and review the range of required reserves according to updated budget calculations and plans.

Where reserves are lower than or exceed the desired range, the Board will put plans in place to amend the reserves held.

This policy will be reviewed annually by the Finance, Audit & Risk Subcommittee, and the board, and is reported publically within the organisation’s financial statements.

Join The Wheel today and avail of membership deals

Find out how you can cut your costs, and maybe even avail of FREE membership, by joining The Wheel today.

Become a member