Parish reserves may be an accident of history or part of a deliberate financial plan. The Charity Commission has issued guidance – see their document CC19 which starts by stating the general legal duty of charity trustees (such as PCC members) to apply the income of the charity on its purposes within a reasonable period of receipt. Nevertheless the guidance continues to set out how a charity may demonstrate justification for having reserves.
The national church has produced two reserves guides to help PCCs:
- ‘Investing your Reserves – a short guide for PCCs’ looks at the questions PCCs should consider when reviewing their reserves.
- ‘A simple guide to Parish Reserves policies’ helps PCCs develop appropriate policies for managing reserves, including theological reflection to help determine an ethical level of reserves and practical guidance on writing a reserves policy.
For PCCs two major areas of expenditure, parish share and fabric repairs, are likely to be relevant to a reserves policy. While a PCC should budget to pay its Parish Share from income rather than reserves, there can be times of unexpected increases of other expenditure or decreases in income so that the use of such reserves becomes necessary. Similarly the extent to which fabric costs, and especially emergency repairs, cannot be met from restricted fabric funds would again be a reason for establishing and budgeting to build up a reserve.