Committee question......

[TruckersWife]

Hi, im the deputy of a committee run pre-school, myself and the rest of the staff are asking for a payrise, the committee are umming and aarrring over how much etc. at the same time the treasurer is excited over the amount we have in the bank....so my question is, as we are a charity, how much are we 'allowed' to have in the bank? can anyone link me to anything?
Thanks x

[SeptemberBabies]

There is no "allowed" amount to have in the bank. But having served on a number of different committees for charities and voluntary community groups, there are some best practices.

Depending on how big the charity income is, you need enough in the bank to cover essential costs for a set amount of time should you have no income.

This may mean, for example, keeping rental costs for a year in the bank. Or for a smaller group that would be easy to fold if income drops to nothing, maybe enough to cover rent for 1 term is enough.

If you have other essentials that have a cost to maintain, the same principle applies. Average how much is spent on essential maintaince and keep a proportion of this in contingency.

The committee as a whole must decide that, should the charity fold tomorrow and have no income, how long would it take to either (a) close down and tie up all lose ends. Or (b) Obtain alternate funding. During that time, what would costs be?