Free reserves

Free reserves answer a simple question: if income stopped tomorrow, how much could the charity actually draw on? Not everything on the balance sheet counts. Restricted and endowment funds are off-limits, and unrestricted money locked in your building or designated for a plan is not really “free” either.

The Charity Commission (CC19) defines free reserves as that part of unrestricted funds freely available to spend, excluding restricted and endowment funds and amounts tied up in fixed assets or otherwise committed. (Source: GOV.UK, Charity reserves: building resilience (CC19), accessed 9 July 2026.) There is no legally required level — trustees set a policy proportionate to their risks.

Work out yours, then write a short reserves policy explaining the target range and why. Use the reserves calculator to do the sums, and see the Trustee & Governance Handbook for how to set the policy.