Registered Charity

[fimbo]

does a charity have to be non profit making, and what happens if you do make a profit ? can anyone direct me to something i can print off plese ?

i have tried the charity comm site - but cant make head nor tail of it lol !!

[Cait]

I think if you plough the profit back in to the charity it's ok

[HappyMaz]

I think if you plough the profit back in to the charity it's ok

I remember from my PLA days (and Brownies, come to that) that there is an expectation on the part of the Charities Commission that charitable groups do not build up large reserves of money in their accounts, but that funds are ploughed back into the charity, as Cait says. I guess the trick is getting the balance right - you need to set aside some money to cover things like redundancy/holiday pay etc, but you don't want to have lots of money sitting about when you could be using it for developing your group.

 

Not that its a problem I've ever suffered from!

 

Maz

[narnia]

Nor me! At my old group, we were allowed to build up funds , as Maz says, for holiday/redundancies etc, but were also allowed to have a reserve fund for our own building....which never happened, so the money was spent on other things, some refurbishment etc....... I think, as long as you're not sitting on squillions of £££'s, you're ok

[fimbo]

so we should work out how much we would need in case of redundancies etc, what about holding reserves for maintaining our building and grounds..?

should we also have some set aside incase we have a 'lean' term to cover wages etc -im thinking about the autumn term when we are usually quieter and tend to make a loss ?

[narnia]

I'd say all of that is ok, I'd expect the charity commission to expect you to be prudent and have something in reserve to cover maintenance and yes,I think they would accept the contingency fund idea for lean periods. We basically tried to keep six months worth of wages etc.............but I have just learnt that in fact, my old group are now running at a VERY serious loss, and I don't know how the CC would look on that?

[blondie]

we have been told that terms worth of money to cover wages ,rent etc should be held in the reserve account -dont know if thats right though.

[lynned55]

It is deemed 'good practice to keep 3 months running costs in reserve. As a registered charity you are expected to put back any monies into the charity however if there is a large item you wish to purchase you may save for it. So I suppose if you wished to buy something that was going to cost 1000's that would still be okay.

[Guest]

Hello. New to this forum as a Chair of a pre-school who is getting sucked in by all I need to do!

I had to look in to this as we had to share our accounts with the owners of our building when we were looking in to discussing a licence with them. They took one look at a reserve we had built up and proposed a huge increase in our rent because they thought we were making a huge profit out of them.

So I contacted the Charity Commission. On their website is a from RS3 whihc discusses reserves. the summary is that it is prudent to cover staff redundancy, running costs for 3-4 months but up to 6 would be fine (includes wages and rent) and you need to review what should be in your reserves annually as redundancy costs increase annually as they are based on years staff have served. It also reduces the vunerablility of the committee as contractural costs are not covered in the insurance whihc protects charitable committees - I can't remember what it is called.

Hope that helps