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Financial Reserves Policy

Sets out how the Society categorises and utilises its financial reserves.

Financial Reserves Policy

1. Purpose and Objectives:

The Feilding and Districts Art Society (the Society) recognises the importance of maintaining financial reserves to ensure the long-term sustainability and stability of the organisation. The purpose of this policy is to provide guidelines for the management and utilisation of financial reserves.

2. Definitions:

  • Financial Reserves: Funds set aside by the Society for specific purposes or contingencies, separate from the organisation’s operating budget. 

3. Principles:

  • Prudent Management: The Society will exercise prudent financial management in accumulating and using financial reserves to support its mission and activities.

  • Transparency: the Society will be transparent in its financial reporting regarding the existence and purpose of financial reserves.

 4. Types of Reserves:

The Society will maintain the following types of reserves:

  • Operating Reserves: These reserves will cover short-term operational needs, such as unforeseen expenses, cash flow fluctuations, and emergencies. The goal is to maintain a minimum balance equal to 3 months of operating expenses - approximately $40,000.

  • Program and Project Reserves: Specific reserves will be established for significant projects, initiatives, or capital expenditures. These reserves will be funded as needed and depleted when the purpose is achieved.

  • Endowment Reserves: The Society will establish an endowment reserve fund to generate income for long-term sustainability. The principal of the endowment will be preserved, and only the income generated will be used for operational purposes.

 5. Funding and Depletion of Reserves:

  •  Funding: Reserves will be funded through surplus revenue, donations, and other sources as deemed appropriate by the Society’s committee.

  • Depletion: Reserves may be depleted only for the specific purposes for which they were established, and such decisions require approval by the Society’s committee.

6. Reporting:

The Society’s committee will provide regular financial reports to its stakeholders, including the balance and purpose of each reserve, in its annual financial statements and other communications. 

7. Review and Evaluation:

This policy will be reviewed annually by the Society’s committee to ensure it remains aligned with the organisation’s financial goals and mission.

8. Adoption and Amendment:

This Financial Reserves Policy will be adopted by the Society’s committee and may be amended with their approval.

 

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