Purpose of this document

This document sets out the agreed financial reserves policy of Salford u3a.

What are financial reserves?

Salford u3a’s financial year runs from January to December. In simplistic terms, our financial reserves, ie monies held on account, peak at the beginning of the year as membership renewals are received and diminish across the course of the year as operational expenditure is incurred.

For the purposes of this policy, our financial reserves are the funds held, or forecast to be held, at the end of each financial year.

What is an appropriate level of financial reserves for Salford u3a?

The following is extracted from the Third Age Trust’s Information for Treasurers (January 2014):

There is no single level which is right for all charities as the amount of reserves being held should reflect the particular circumstances of the charity. Reserves are needed to ensure continuity in the event of a sudden drop in income, to cope with unexpected and unplanned increases in expenditure, to cover future equipment demands and to deal with emergency situations. They provide a contingency for expenditure over and above day to day commitments and other planned outgoings. All U3A committees should develop a policy on reserves which states the target in terms of months of running costs and explains why that target has been agreed and what the money can be used for. It would be hard to imagine that any U3A could need more than 6 months running costs as a reserve and even this would be considered by some to be unnecessarily high, but it is up to your committee to decide and be able to justify it if challenged. In addition, a high level of reserves may well affect your chances of outside funding e.g. Awards for All.

In accordance with the above, Salford u3a sets its target for end of year financial reserves at the equivalent of 6 months running costs.

Monitoring and reporting of actual v forecast reserve levels

It is the responsibility of the treasurer to monitor actual levels of reserves and to report to the committee in a timely fashion in the event that there is a significant deviation from forecast levels of reserves due to unexpected (high or low) income and/or expenditure.

Actions to correct inadequate or excessive levels of reserves

It is the collective responsibility of the committee to agree actions to correct a forecast or actual level of reserves that deviates from the target. Agreed actions must further the interests of Salford u3a.

Actions may include:

• An adjustment, up or down as appropriate, to the following year(s) membership fees
• An adjustment, up or down as appropriate, to the following year(s) recovery of room hire charges from our members
• The purchase of assets beneficial to the ongoing operation of Salford u3a, eg projectors, software licenses