Reserves Policy

Walsall Community Active Projects CIC

Company number 17051741

Reserves Policy

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1. Statement of Intent

Walsall Community Active Projects CIC aims to be financially sustainable so we can continue to serve our community in the long term. This policy sets out how we manage our reserves: the funds we hold to protect us from financial shocks and to invest in our future.

2. What Are Reserves?

Reserves are the part of our funds that we have set aside, beyond what is needed for our day-to-day running costs and beyond any restricted funds we hold for specific purposes.

Our reserves are made up of:

• Unrestricted reserves: money that can be used for any purpose that supports our objects.
• Designated reserves: unrestricted money the Board has set aside for a particular purpose, such as future projects or major equipment.
• (Restricted funds, given by funders for specific purposes, are not part of our reserves and are managed separately.)

3. Why We Hold Reserves

Reserves help us to:

• Continue delivering services if income drops unexpectedly
• Cover redundancy and contractual costs in a wind-down scenario
• Manage delays in funder payments
• Respond to new opportunities, such as match-funding requirements
• Invest in equipment, training, premises and growth
• Cover unexpected costs, such as legal or insurance claims

Holding reserves is responsible, not surplus-driven. As a community interest company, we do not exist to make profit, but to deliver community benefit. Reserves help us do that reliably.

4. Our Target Range

Our target unrestricted reserves are equivalent to three to six months of average running costs.

This range reflects:

• The mix of funding we rely on (grants, contracts and earned income)
• Our size and stage of development
• Sector guidance from the Charity Commission and CIC Regulator (used as good practice)
• Feedback from our accountant and our auditors

As a newly established CIC, we expect to build up to this range over our first 24 to 36 months.

5. How We Calculate Reserves

The Finance Lead will:

• Calculate our average monthly running costs based on the most recent six to twelve months
• Identify unrestricted reserves from the management accounts
• Compare to the target range
• Report to the Board at least every six months

6. If Reserves Are Below Target

If reserves drop below three months of running costs, we will:

• Discuss it at the next Board meeting
• Agree an action plan, which may include reducing costs, increasing income or pausing growth plans
• Increase the frequency of monitoring
• Tell funders and partners where required by funding agreements

7. If Reserves Are Above Target

If reserves rise significantly above six months, the Board will consider:

• Whether to invest in new or expanded services
• Whether to designate part of the reserves for specific future use, such as equipment, premises or a new project
• Whether to subsidise sessions, equipment or transport for participants on low incomes
• Whether to use funds to support staff development, pay or wellbeing

Holding excessive reserves is not consistent with our purpose. We will not stockpile funds beyond what is reasonable.

8. Designated Reserves

The Board may set aside parts of our unrestricted reserves for specific future purposes. For each designation, we will record:

• The purpose and expected use
• The amount set aside
• The expected timescale
• The conditions for releasing the funds

Designations can be reviewed and changed by the Board.

9. Investment of Reserves

Reserves will normally be held in:

• Our main current account for everyday operations
• A linked savings or deposit account for the bulk of reserves

We will:

• Use UK-regulated banks covered by the Financial Services Compensation Scheme
• Keep deposits within the protection limit per institution where practical
• Not invest in stocks, shares or other higher-risk products without specific Board approval and professional advice

10. Reporting and Review

Reserves are reported to the Board at every meeting. This policy is reviewed annually as part of the Board's financial planning, and the target range is reconsidered as the organisation grows.

11. Reserves Statement in Accounts

A summary of our reserves position will be included in our annual report and accounts, explaining:

• The current level of reserves
• The target range
• Any designations
• How reserves are managed in light of risks and opportunities

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Policy Review

This policy was adopted on 14 February 2026 and will be reviewed annually, with the next scheduled review in February 2027. It will also be reviewed earlier if there are significant changes in legislation, guidance, or our activities.

All staff, volunteers and trustees will be made aware of any updates and asked to confirm they have read and understood the revised version.

Signed on behalf of the Board