Reserve Policy

Effective Date: 5 April 2024

1. Introduction

The purpose of this Reserve Policy is to ensure the stability of the mission, programs, contracts, and ongoing operations of Parapluie FLAM. The reserve is intended to provide an internal source of funds for situations such as a sudden increase in expenses, one-time unbudgeted expenses, unanticipated loss in funding, or uninsured losses.

2. Definitions and Goals

2.1 Reserve Fund:
The reserve fund is a designated fund set aside to stabilise the organisation during unexpected shortfalls or to take advantage of strategic opportunities. It is not intended to replace a permanent loss of funds or eliminate an ongoing budget gap.

2.2 Target Reserve Amount:
The target amount to be held in reserve is 6 months of average monthly operating costs. This target will be reviewed annually and adjusted based on the current financial climate and organisational needs.

3. Establishing the Reserve Fund
The reserve fund will be built through the allocation of budget surpluses, specific fundraising initiatives, and other sources as determined by the Board of Trustees..

4. Usage of Reserve Fund

4.1 Authorization:
Withdrawals from the reserve fund must be approved by a resolution of the Board of Trustees. The resolution must include the amount to be withdrawn, the specific purpose for the withdrawal, and a plan for replenishment.

4.2 Permitted Uses:
The reserve fund may be used for:

  • Unexpected shortfalls in revenue.
  • Unanticipated and necessary expenses.
  • Investment in strategic opportunities that will strengthen the organisation.
  • Temporary funding for cash flow management.

4.3 Prohibited Uses:
The reserve fund will not be used for:

  • Routine operational expenses.
  • Non-critical projects or expenses.

5. Replenishing the Reserve Fund

5.1 Plan for Replenishment:
Any use of the reserve fund will be accompanied by a plan to replenish the fund within a reasonable time frame, typically within 18 months. The replenishment plan will be approved by the Board of Trustees as part of the authorisation for the use of the reserve fund.

6. Monitoring and Reporting

6.1 Regular Review:
The Board of Trustees will review the reserve fund balance and its adequacy in relation to the target reserve amount annually. Adjustments to the target amount and replenishment plans will be made as necessary.

6.2 Financial Reporting:
The reserve fund balance will be reported in the organisation’s financial statements. The Board of Trustees will be provided with a quarterly report detailing the status of the reserve fund, including any withdrawals and replenishments.

7. Policy Review

7.1 Annual Review:
This Reserve Policy will be reviewed annually by the Board of Trustees to ensure its continued relevance and effectiveness. Any amendments to the policy will be made by a resolution of the Board of Trustees.

Contact Information: