<aside> 💡 Applicable to: All

This policy takes account of the Residential Holiday Schemes for Disabled Children (England) Regulations (2013) and the National Minimum Standards for Residential Holiday Schemes for Disabled Children (Department for Education).

This policy has been approved by the OMH Board of Trustees

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Policy Statement

OMH understands the importance of responsible financial management, and the varying factors impacting the procurement and utilisation of financing, including:

• The availability of current cash flow to meet current operating expenditure;
• The accummulation of suitable levels of reserves, in order to secure the future of the organisation and continue to meet its charitable goals;
• The goal of providing our service at a very low cost which is easily affordable by families, and to offer free places, discounts or structured payments where this is required; and
• The need to ensure the proper and prudent use of charitable donations.

Reserves Policy

The Charity Commission states that “Reserves are that part of a charity's unrestricted funds that is freely available to spend on any of the charity's purposes”. OMH’s Trustees feel it is prudent to build up the charity’s reserves so as to:

• fund shortfalls in income, when income does not reach expected levels;
• fund unexpected expenditure, for example when projects overrun or unplanned events occur; and
• create a pool of expendable income in the event of promised funding from a particular source being unexpectedly cut.

OMH’s reliable income comes each year from fees paid by the families of children and young adults attending our holidays. Fees are set by the management team at each holiday and reviewed by the OMH Trustees to ensure that they are appropriate. Holiday fees are subsidised by donations and the remaining funds required to run the holidays are sourced from fundraising activity.

The estimated total cost of running of the charity each year is around £77,000. This is made up of summer holiday costs of around £45,000, depending on the size of the holiday (estimate assumes 40 children) and how much of the accommodation and associated costs are subsidised by the host organization (estimate assumes minimal). The cost of running Mencap Outdoors is around £15,000, with a further c. £17,500 of annual expenses by the charity. Around 66% of OMH’s annual income comes from sponsored events, grants from trusts and foundations, and ad hoc donations. This income is by its nature variable and can be unreliable.

The Trustees acknowledge that fundraising will always be to some extent irregular and that some years will see decreased fundraising activity (and therefore reduced income). To this end, they think it wise to adopt a policy which holds in reserve between 0.5x and 1.0x the normal annual running costs of the charity (implying an expected range of £115,500 to £154,000 of total cash). In practice, our bank balance fluctuates materially over any 12-month period. If cash balance is maintained within the expected range maintained for a 12-month period then we can be confident that our reserves are adequate. A high-level budget is prepared each year in order to review recent income and expenditure and examine predictions for the coming 12 months.

If the reserves do begin to exceed the amount stated, it may not be prudent to take immediate steps to deplete the reserves unless a further increase is anticipated. However, options to do so include:

• Offering more free or assisted places to children from low-income households. This policy could run alongside an increase in child fees, softening the increase for those families who struggle to meet it;
• Hiring a nurse or other medical professional to attend the holiday each year;
• Replacing and upgrading large and long-term equipment, e.g. marquees, sports equipment;
• Hiring or buying a more suitable storage facility for equipment to be held in year-round, or upgrading the current facility with shelving etc.;