Wylie & Bisset: COVID-19 shows why charities need reserves
Jenny Simpson, partner and head of Wylie & Bisset’s charities team, has said that if anyone ever wondered why charities need reserves, then the situation we face with Covid-19 is the answer.
Ms Simpson, who was recently re-appointed to the SORP Committee, the advisory committee that oversees the rules for how charities across the UK and Ireland report on their finances, says that throughout the 25 years she has worked with charities, the issue of reserves has been ever-present, but changing.
She said: “I’ve seen everything from funders imposing their own reserves policy on the charities they fund (and then asking why the charities don’t meet it) to grant assessors making up a reserves policy or calculating actual reserves held, because it wasn’t clear from the accounts.”
“The reality is that a well-run charity which has been allowed (by funders, be that foundations or government) to carry a realistic level of reserves, will be in a much better position to not only weather the Covid-19 storm, but to innovate and invest in services that will help all of us at this incredibly trying time.”
Ms Simpson notes that, over recent days, it has been encouraging to see the number of foundation funders explicitly reassure the charities they fund that they’ll continue to support them and will be flexible.
She concluded: “Let’s hope that, when this is all over, we have gained a better recognition and understanding that our charities need reserves and that this is in all of our best interests.”