Ladybird Pre-School Nursery
Charitable Incorporated Organisation
Registered charity no 1162069
Reserves Policy
Reserves are part of a charity’s unrestricted funds that are available to spend on any of the charity’s purposes. This definition excludes restricted income funds and endowment funds.
The Trustees of Ladybird Pre-School Nursery are responsible to the key stakeholders for ensuring that the organisation’s finances comply with relevant regulations. Stakeholders are individuals and organisations connected with our Nursery and include children, parents/carers, staff, funders, bankers and statutory bodies.
Trustees are also responsible for ensuring that the finances are managed in accordance with the Nursery’s constitution.
The Nursery needs reserves to:-
1. meet redundancy liabilities should the Nursery have to close;
2. ensure there are sufficient cash reserves in the current account to cover day to day running costs;
3. ensure continuity of service provision by:
a) meeting unexpected costs such as cover for illness or maternity leave, etc;
b) covering running costs during periods of lower income (e.g. while adjusting to school policy changes or following falls in funding); and
4. replace equipment as it wears out and carry our necessary building maintenance.
In light of the above, we aim to maintain reserves consisting of:-
a) reserves to meet redundancy liabilities in the event of the Nursery ceasing to operate; and
b) general contingency reserves equal to one term’s (i.e. one third of annual) total expenditure.
The Management Committee will monitor the actual level of reserves and compare with the target level annually following the preparation of annual accounts. The Nursery has no restricted funds.
In the event of reserves falling significantly below the target level, we aim to restore the reserves as soon as possible by increasing fundraising, increasing income or reducing expenditure. Similarly, if reserves are significantly above the target level, the Management Committee will put in place a plan, aiming to eliminate the excess within a sensible timeframe by spending money to enhance the quality of Nursery provision, or otherwise further the aims of the Nursery, or by reducing fundraising.
The Management Committee will not, however, take steps that might call into question the ability of the Nursery to continue as a financially viable operation in the long term. In particular, it will not plan to use excess reserves to cover essential running costs.
Policy Review
This policy will be reviewed and approved annually following our financial year-end by the Nursery Management Committee.
This policy was adopted by Ladybird Pre-School Nursery Management Committee on
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Review date………………………………………………………………………………
Signed on behalf of the Management Committee…………………………………………………….
Name of signatory………………………………………………………………………………………………………… Role of signatory…………………………………………………………………………………………………………
