Reserve Fund Policy

1. Purpose
   The purpose of this policy is to establish a clear framework for creating, maintaining and using reserve funds to support the long-term financial sustainability of Runners Media CIC. Maintaining adequate reserves enables the organisation to continue delivering its charitable and community benefit activities during periods of financial uncertainty, respond to unexpected events and manage financial risks responsibly. Reserve funds are intended to provide financial resilience and should not replace sustainable income generation or prudent financial planning.
2. Scope
   This policy applies to:
    Directors
    Finance Lead or Treasurer
    Employees responsible for financial management
    Project Managers preparing budgets
    Anyone authorised to make financial decisions on behalf of Runners Media CIC
3. Objectives
   The reserve fund will help Runners Media CIC to:
    Maintain continuity of essential community services.
    Meet financial obligations when income is delayed.
    Protect the organisation from unexpected expenditure.
    Manage financial risks responsibly.
    Support business continuity during emergencies.
    Demonstrate sound financial governance to funders, commissioners and stakeholders.
    Enable carefully considered strategic investment where appropriate.
4. Definition of Reserves
   For the purpose of this policy, reserves are unrestricted funds that are freely available for
   general use.
   Reserves do not normally include:
    Restricted grant funding
    Endowment funds
    Funds held on behalf of another organisation
    Assets that cannot easily be converted into cash
    Funds legally committed to specific projects
5. Target Reserve Level
   Runners Media CIC aims to maintain unrestricted reserves equivalent to three to six months
   of core operating expenditure.
   Core operating expenditure includes:
    Salaries and freelance costs
    Employer obligations
    Office and administration costs
    Insurance
    Professional fees
    Essential software subscriptions
    Website hosting and digital platforms
    Equipment maintenance
    Core community engagement activities
   The Directors will review the target annually and may adjust it according to:
    Financial risk
    Funding stability
    Cash flow forecasts
    Planned organisational growth
    Economic conditions
6. Building Reserves
   The organisation will seek to build reserves through:
    Operating surpluses
    Unrestricted donations
    General fundraising
    Sponsorship income
    Advertising revenue
    Consultancy income
    Trading activities
    Interest earned on reserve balances
   Building reserves will be balanced with continued investment in community benefit
   activities.
7. Permitted Use of Reserves
   Reserve funds may only be used where appropriate and proportionate.
   Examples include:
    Temporary cash flow shortages
    Delays in grant payments
    Unexpected loss of significant income
    Essential equipment replacement
    Emergency building or IT repairs
    Legal or regulatory costs not covered elsewhere
    Business continuity following an emergency
    Strategic investment opportunities that directly support the organisation’s mission
   Reserve funds should not routinely be used to cover ongoing operational deficits.
8. Approval Process
   Any withdrawal from reserve funds must:
    Be supported by a written justification.
    Demonstrate why alternative funding is unavailable.
    Be approved by at least two Directors.
    Be recorded in Board minutes.
    Be reflected within financial records.
   Where practical, a recovery plan should be prepared explaining how reserves will be rebuilt.
9. Financial Controls
   The Directors will ensure:
    Reserves are held in secure UK-regulated bank accounts.
    Financial records accurately distinguish reserve funds from restricted funds.
    Reserve balances are reconciled regularly.
    Appropriate financial controls are maintained.
    Dual authorisation applies to significant transactions.
10. Restricted Funds
    Restricted income will not normally be transferred into reserves.
    Restricted funds may only be used where:
     The funding agreement explicitly permits it; or
     The funder provides written consent.
    The organisation will always comply with donor restrictions.
11. Investment of Reserve Funds
    Reserve funds should be held in low-risk, easily accessible accounts.
    When selecting where reserves are held, the Directors will consider:
     Security
     Liquidity
     Accessibility
     Interest rates
     Financial stability of the provider
    The organisation will not make speculative or high-risk investments using reserve funds.
12. Monitoring
    Reserve levels will be monitored:
     Monthly by the Finance Lead or Treasurer.
     Quarterly by the Directors.
     Annually during budget preparation.
    Monitoring will include:
     Current reserve balance
     Cash flow forecasts
     Income risks
     Financial commitments
     Reserve adequacy
13. Reporting
    Information regarding reserves will be included where appropriate within:
     Annual financial statements
     Directors’ reports
     Funding applications
     Annual CIC Report (CIC34 or its successor reporting requirements)
    Reports should explain:
     Current reserve level
     Target reserve level
     Reasons for any significant increase or decrease
     Planned actions where reserves fall below target
14. Falling Below Target
    Where reserves fall below the agreed minimum level, the Directors will develop a recovery
    plan which may include:
     Increasing unrestricted fundraising.
     Reducing discretionary expenditure.
     Improving cash flow management.
     Diversifying income sources.
     Reviewing operational costs.
     Building future surpluses where appropriate.
    The recovery plan should be reviewed regularly until reserves return to an acceptable level.
15. Exceptional Circumstances
    The Directors may approve reserve use outside this policy where exceptional circumstances
    exist, including:
     Major emergencies
     National crises
     Significant operational disruption
     Business continuity incidents
     Serious legal obligations
    Any exceptional decision must be fully documented.
16. Responsibilities
    Directors
    The Directors are responsible for:
     Approving this policy.
     Setting reserve targets.
     Approving reserve use.
     Monitoring financial sustainability.
     Reviewing reserve adequacy annually.
    Finance Lead or Treasurer
    Responsible for:
     Maintaining reserve records.
     Producing financial reports.
     Monitoring reserve levels.
     Advising the Directors on financial risks.
     Supporting annual reviews.
    Project Managers
    Responsible for:
     Preparing realistic budgets.
     Avoiding unnecessary reliance on reserve funds.
     Identifying financial risks early.
17. Review
    This policy will be reviewed every two years, or sooner if:
     Significant financial changes occur.
     Funding arrangements change.
     Organisational growth requires revision.
     Relevant legislation or accounting guidance changes.
18. Related Policies
    This policy should be read alongside:
     Financial Controls Policy
     Budget Management Policy
     Procurement Policy
     Risk Management Policy
     Business Continuity Plan
     Conflict of Interest Policy
     Asset Management Policy
19. Policy Statement
    Runners Media CIC recognises that maintaining appropriate financial reserves is essential for
    protecting our long-term sustainability and ensuring uninterrupted delivery of community
    benefit activities.
    Through prudent financial planning, responsible governance and transparent decision-
    making, we are committed to maintaining reserves that enable the organisation to remain
    resilient, responsive and financially secure while continuing to serve our communities
    effectively.
    Approved By
    Rumana Afroze Rakhi – Director
    Runners Media CIC (Reg: 15283707)