Charities: Reserves

(asked on 30th December 2020) - View Source

Question to the Department for Digital, Culture, Media & Sport:

To ask the Secretary of State for Digital, Culture, Media and Sport, what discussions he has had with the CEO of the Charity Commission on the use of charity reserves since in each year since 2017.


Answered by
John Whittingdale Portrait
John Whittingdale
This question was answered on 11th January 2021

The Secretary of State and Minister for Civil Society meet the Charity Commission on a regular basis to discuss a range of matters that are relevant to the charity sector. These have included discussions on the charity sector's financial resilience in relation to the ongoing Covid-19 pandemic.

Charity reserves make an important contribution to charities' financial resilience and their ability to respond to financial shocks. All registered charities in England and Wales must explain their policy on reserves in their trustees’ annual report, stating the level of reserves held and why they are held. We welcome the Charity Commission's guidance on charity reserves, which was originally published in 2016 and subsequently refreshed in 2018. The guidance sets out clearly what reserves are, how to develop a reserves policy, the legal requirements for publishing the reserves policy and reporting on it, and what trustees should do to keep proper oversight of their charity’s reserves. It continued to make clear that all charities need a policy that establishes a level of reserves that is right for the charity and clearly explains to its stakeholders why holding these reserves is necessary.

Building on this guidance, the Charity Commission provided clear advice to charities on financial management in 2020, including on the appropriate use of reserves in the context of the Covid-19 pandemic. The Department for Digital, Culture, Media and Sport has made no assessment of the specific impact of this advice.

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