Talk:Meetings/2009-04-26/Agenda/Reserve Policy

The obvious question is: do we need a reserve policy this early on? We currently have no long term commitments, and the company is very young and growing rapidly, so I'm not convinced that there is much benefit at this point. When we start having offices, staff, etc., then that would seem to be the best time to introduce this. Before that, perhaps this is just reflecting the british love of bureaucracy? Mike Peel 06:55, 21 April 2009 (UTC)

I, too, cannot see the benefits of this at this early stage. Our revenues are so little as to cause us to hold a reserve that is near pointless - and would most likely only harm the company rather than benefit us. As we grow there will be a time for this to be introduced, but I don't feel that it is now. --Skenmy 07:02, 21 April 2009 (UTC)

Have you read the Charity Commission guidance I linked to? They recommend all charities have a reserve policy, although small charities can just have something very simple (I consider what I've written to be very simple - it doesn't go into any details about how much we need in reserve for different things, where those reserves will come from, etc.). Regardless of size, it would never be a good idea to let the bank account run dry - the £1000 minimum is intended to be enough to hold an EGM, I think we should always be able to hold an EGM at short notice in case things go horribly wrong (£1000 is probably more than enough for that - I could be persuaded to reduce it to £500 if people want. This is just a proposal, the numbers can be changed.). The obligation not to hold on to too much reserves also applies to charities of all sizes - we can't spend out first few years saving up and not spend anything, while we all know that, it might as well be formalised. I think having a formal reserve policy would look good when the CC reviews everything before deciding whether to give us registered charity status - if we don't have one, they may ask about it and that would just delay things. --Tango 13:12, 21 April 2009 (UTC)

I can see the need for some kind of policy, but I think all your numbers are way too high, at least for now. I'd say £100 (for which an EGM could just about be held) and 10% (or maybe even less). You hold reserves to guard against necessary but unforeseen expenditures. Though it is of course in the nature of "unforeseeable expenditures" to be unpredictable, I can't imagine what on earth would require us to spend half our yearly income on short notice. I also think the minimum spend policies are inadvisable. There is no point throwing money out of windows if we haven't found anything useful to do with it. Mandating me (or my successor) to invest money over a certain amount in savings accounts would be rather more useful. To be honest though I think we'd be better off just being financially careful for the first few years, without setting anything in stone. --Cfp 21:32, 21 April 2009 (UTC)

You won't get 7 board members to the same place at short notice for £100. As the policy says, the reserves aren't to protect against unforeseen expenditures (there shouldn't be any of those at this stage, when we reach the stage were there could be (staff going off sick and needing to be temporarily replaced, say), we'll amend the policy accordingly), they are to protect against unforeseen drops in income - something happening which halves donations is conceivable (really bad press just before the fundraising drive, for example). It doesn't even need to halve, if it drops by 25% for two years, that's the same end result (although it would be easy to cut expenditure in that case). Have you read the CC guidelines? Not building up excessive reserves is the main purpose of a reserves policy - it explicitly says that just saving any surplus without any specific intentions is a bad idea. You could consider the 100% limit as sufficient protection against that, but I would like to allow ourselves to build up a larger reserve than I think it would be reasonable to build up in one year (precisely what is reasonable is up for negotiation - feel free to suggest alternative numbers). If we can't find anything useful to do with the money we should stop asking for donations - in fact, people will just stop giving them to us if they realise we don't need the money. --Tango 23:48, 21 April 2009 (UTC)