Reserves policy

LTSB operates an agreed reserves policy designed to ensure that it holds sufficient unrestricted funds as reserves to:

• maintain the Charity’s core and essential activities and ensure continuity as a going concern in the event that funding from external sources for core or essential activities should cease; and
• provide a reasonable level of working capital to meet more immediate development and continuance needs, and to ensure that the organisation remains up-to-date and capable in its operations.

To determine the level of reserves required to meet the first of the objectives of the reserves policy set out above, the Board identifies the core and essential activities of the Charity and estimates the financial requirement to keep these activities operational, but without significant expenditure on a new project for a period of six months.

To determine the level of reserves required to meet the second of these objectives, the Board assesses more immediate development needs to:

• ensure efficient operation of the Charity,
• meet perceived needs for new activities to meet emergent social needs of older people, and
• meet immediate shortfalls in income resulting from changes in funding patterns.

In both cases, the Board is guided by its annual risk assessment exercise whereby it identifies potential risks to the future of the Charity, the severity of each identified risk for the Charity’s future, and the likelihood of the risk actually occurring. The estimation of the required level of reserves can then be adjusted to take account of this analysis.