by SRD » Sun Nov 08, 2020 9:43 am
Charities, especially large ones with lots of responsibilities and employees, need to keep quite large reserves to see them through lean times. There used to be a very good M.S. charity, who relied mainly on voluntary workers but had a core of professionals to cover legal requirements, who funded research into the more esoteric ideas that became mainstream after their work was published. They always advertised that 90% of donations went to research and in their case this was true. Unfortunately, due to a retrospective decision by the Tax Office on legally required pension benefits, they found themselves owing several thousand pounds in back taxes and pension contributions, money they didn't have nor could raise in the short period given them (3 months)so they had to go bust and all their good work was lost. The Charity authorities blamed the Trustees for failing to maintain a sufficient reserve.
Military charities, and others like Oxfam, must be able to respond quickly in times of crisis, be it casualties from war or other emergencies like drought, floods or pandemic so need to keep large reserves so as to be able to get help to those areas affected as soon as possible. It's no good waiting 'til next November for your funds if the emergency is in January.
Currently investigating the Hillmans of Sussex.