Reserves Policy


The two regulators in Scotland and England expect Trustees to decide, publish, implement and monitor their charity’s reserves policy so that they can comply with their legal duties to:

  • act in the interests of their charity and its beneficiaries;
  • protect and safeguard the assets of their charity;
  • act with reasonable care and skill; and
  • ensure their charity is accountable.

In practice, this means that Trustees should develop a reserves policy that:

  • fully justifies and clearly explains keeping or not keeping reserves;
  • identifies and plans for the maintenance of essential services for beneficiaries;
  • reflects the risks of unplanned closure associated with the charity’s business model, spending commitments, potential liabilities and financial forecasts; and
  • helps to address the risks of unplanned closure on their beneficiaries (in particular, vulnerable beneficiaries), staff and volunteers publish the reserves policy (even if not required to by law) and ensure it is tailored to the charity’s circumstances – it should not be just a standard form of wording. It should explain to funders, beneficiaries, the public and the Commission exactly what reserves are kept (or not kept) for and when they are to be used.

In addition to setting the reserves policy for Echoes International, this policy also details actions which will be taken to ensure the approach is re-assessed annually, taking into consideration associated risks, potential funding changes and financial climates.

Reserves Policy

Echoes International receives and distributes gifts received for mission support and specific mission projects. Specified gifts for Mission Partners are distributed monthly. Undesignated gifts are held in a discretionary pool and distributed at regular intervals to all commended Mission Partners listed on the Daily Prayer Guide (‘DPG’, published annually).

A formula is used to govern the distribution of these undesignated funds, which is based on marital status, family size, average earnings in the UK and the UN cost of living index for country of service. Although there is no contract with any Mission Partner to provide a set level of support, in reality, for a large number of the Mission Partners, these funds will represent a substantial proportion of monthly income.

Funds are also received and distributed for specific purposes at the discretion of Trustees. Typically, these cover the following:

  • Medical support;
  • Mission support;
  • National Workers;
  • Training;
  • Disaster & Poverty Relief; and
  • Strategic Projects.

These funds are also distributed on a regular basis (usually twice a year), and in view of the nature of some of the works supported (e.g. hospitals), and the purpose of the funds, reserve balances are held to ensure a continuing level of support.

We also use the funds held at the discretion of the Trustees to run the operation of Echoes International & support the revenue and capital needs of the charity.

Income levels for Echoes International works on the principle of “Faith in God to provide” and as such we do not make appeals for funds or communicate specific financial needs. Whilst this is our core model of operation we also must meet with the expectations of the Charity Regulators in relation to the ongoing needs of the charity in meeting its obligations to mission partners, employees and key beneficiaries.

Some balances are therefore held as reserves and the reason for the existence of these is set out later in the policy. These amounts are kept under regular review (normally annually, during the budget and planning process). It is not our purpose to accumulate reserves but to distribute the funds that we receive as effectively as possible.


This reserves policy consists of five unrestricted funds. The fund names are:

  1. Operating & Office Expenses;
  2. Discretionary Allocation to Mission Partners;
  3. Disaster & Poverty Relief;
  4. Strategic Projects; and
  5. Capital Requirements.

The various amounts of monies held for restrictive reasons is effectively ignored for the purposes of the reserves policy. By default, when the funds held for restrictive purposes are exhausted, there is no other obligation by the Trustees to replenish these funds.

The remainder of the policy details our approaches and outlines the six identified reserve funds and the rationale for the levels stated.

The reserves of the charity are set by the Trustees and take the following into consideration;

  • Holding reserves for the designated funds which reflect the objects of Echoes International;
  • Recommending levels which balance the variable nature of the income received, the level of support by Echoes International as a going concern and the longer-term commitments of the charity to its various stakeholders;
  • The responsibilities of the Trustees to the prudent management of the charity;
  • The reserves will be held primarily as investments;
  • The level of reserves will be reviewed annually as part of the budget and planning process. This actual policy paper and levels of reserve will be revisited as part of the planning cycle; and

Withdrawal of funds from the reserves whether on an occasional or on a regular basis will only be made as a result of a decision taken at a Trustee Board Meeting.

Funding levels & Rationale

Each year the reserves level will be established from the operational plan set each year.

1 Operating & Office Expenses: This fund is used to finance the total operating expenses of the charity (excluding gifts and allocations). Income to this fund is from direct gifts, legacy income and any investment income received.

Level to be held: one year’s equivalent of expenses.

2 Discretionary Allocation to Mission Partners: This is the Mission Partner fund which covers DPG allocation, fellowship gifts, annual fellowship gifts and key worker gifts.

The majority of income for this fund will come from legacies and is used to distribute funds to Mission Partners on the DPG.

The purpose of this fund is to provide a hedge against legacy income which is by its nature unpredictable. We would look to ensure our funding is provided as long as possible to support the work of mission cross-culturally. At the same time, we need to guard against retaining funds long term which could challenge our position that Echoes International is a work of faith. A balance is needed as we review this fund annually between looking to maintain support and not hoarding funds.

Level to be held: one year’s equivalent of allocations.

3 Disaster & Poverty Relief: This fund allows the Trustees to react to short term rapid responses to immediate crises whether disaster, e.g. natural disasters, war, and other humanitarian needs and poverty relief. Normally this fund is built up by designated gifts from churches and individuals.

Level to be held: £100,000

4 Strategic Projects: The main contents of this fund are strategic initiatives and training and support of national workers. The main source of income is from designated gifts and fund allocated from legacies by the Trustees.

Most of the projects covered under strategic funding will be for a three-year period or more, which will have been agreed with the recipient of the gift. The term is dependent on evidence of accountability by the beneficiary.

Level to be held: two years equivalent allocation is retained as a reserve.

5 Capital Requirements: This fund will be used to plan and execute capital projects. The reserve will also be used to allow for unexpected costs, i.e. items which are not detailed in the financial plan but are mandatory. An example of this would be legal and regulatory changes. Funding will come from internal transfers from the general fund and planning process.

Level to be held: £100,000