Reserves Policy

Reserves Policy

1. Purpose

This policy sets out how Rutland Street Church approaches the building and use of financial reserves. Reserves provide a buffer against unexpected costs, give us the capacity to respond to opportunities, and protect the church's long-term financial health.

2. Our Foundation

"Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it." — Proverbs 21:20 (ESV)

"For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?" — Luke 14:28 (ESV)

Biblical wisdom calls us to plan ahead and be prudent with resources. Building reserves is not a lack of faith — it is responsible stewardship that ensures we can continue to serve faithfully even when circumstances change.

3. What Are Reserves?

Reserves are funds held in addition to what is needed to cover day-to-day operating costs. They are distinct from designated funds (which are given for specific purposes) and are available for use at the discretion of the leadership team within the parameters set by this policy.

4. Target Reserve Level

Rutland Street Church aims to maintain a general reserve equivalent to at least three months of ordinary operating expenditure. This figure is calculated annually as part of the budgeting process. The leadership team may set a higher target if the church is planning major projects or has particular risk exposures.

5. Building Reserves

Reserves are built through:

• Budgeting for a modest annual surplus
• Allocating one-off gifts, legacies, or unexpected income windfalls
• Specific reserve-building appeals (with donor knowledge and agreement)

The leadership team reviews the reserve level annually and determines whether additional contributions to reserves are appropriate.

6. Using Reserves

Reserves may be drawn on in the following circumstances:

• Unexpected operating shortfalls (e.g. a drop in regular giving, an unplanned expense)
• Emergency repairs or urgent maintenance to church facilities
• Bridge funding for approved projects while other funding is being secured

Any draw-down from reserves must be approved by the leadership team and documented in the meeting minutes. A plan to replenish reserves should accompany any significant draw-down.

7. Restricted and Designated Funds

Restricted or designated funds are not part of general reserves and must be kept and reported separately. They may not be used for general operating purposes without the donor's consent.

8. Reporting

The reserve balance and any movements are reported to the leadership team at each financial meeting and included in the annual financial report presented to the congregation.

9. Review

This policy is reviewed annually as part of the budgeting process.