Download Birmingham Museums Trust Reserves Policy (PDF) below or the same information can be found on this webpage.

Policy Statement

Birmingham Museums Trust maintains financial reserves to protect its collections, operations, and public benefit activities against income fluctuations and unexpected events. This policy ensures responsible stewardship of the Trust’s resources while maintaining financial resilience. 

Reserve Requirements

Minimum Reserve Levels

The Charity Commission’s CC19 Guidance states: 

“There is no single level or even a range of reserves that is right for all charities. Any target set by the trustees for the level of reserves to be held should reflect the particular circumstances of the individual charity. To do this, trustees need to know why the charity should hold reserves and, having identified those needs, the trustees should consider how much should be held to meet them”

This policy sets out our free reserves, which are defined as unrestricted funds excluding fixed assets and defined benefit pensions. These free reserves include cash and working capital balances.

As part of effective financial management, we hold reserves to ensure we can manage:

• Financial impact of risk. These are a range of risks we face, including the risk of unforeseen increases in expenditure.
• Working capital. A proportion of our reserves are represented by non-cash assets and liabilities such as debtors.

To manage the above the trustees, consider that the Trust should maintain unrestricted reserves consisting of:

• Three months' core operational costs - £3,000,000
• Emergency building maintenance fund -£120,000
• Total minimum reserves: £3,000,000 + £120,000 = £3,120,000

Use of Reserves 

Authorised uses include: 

• Covering temporary funding gaps
• Emergency conservation interventions
• Unexpected building repairs
• Bridge funding for grant-funded projects
• Supporting cash flow during major capital projects.

Risk Assessment Factors 

Reserve levels are determined by considering: 

• Income volatility and funding patterns
• Building condition and maintenance needs
• Collection care requirements
• Staffing commitments
• Exhibition program risks
• External economic factors

Governance Review and Responsibilities

The Board of Trustees are responsible for ensuring that we manage our resources responsibly, and that we cat in the best interests of the organisation that we serve. The Board has responsibility for approving and monitoring of this policy.

The Finance and Risk Committee are responsible for monitoring and supervision of the current and future financial situation and associated risks to the organisation. The committee has responsibility for reviewing this policy and making recommendation for approval to the board.

The Senior Leadership Team is responsible for providing clear and focussed leadership of the organisation, and to ensure our financial stability.

The Finance Director is the policy owner and is responsible for managing our reserves within this policy range, ensuring this policy is reviewed in line with the requirements of the Trust.

Recovery Plan

If reserves fall below minimum levels:

• Immediate notification to Board of Trustees
• Development of action plan within one month
• Implementation of cost control measures
• Enhanced earned income and fundraising activities
• Quarterly progress reviews

Investment of Reserves

• Reserves held in mixed portfolio of cash and low-risk investments
• Investment strategy reviewed annually
• Ethical investment policy applies to all reserves

Notes

The policy includes key elements recommended by the Charity Commission:

• Clear justification for reserve levels
• Specific amounts and calculations
• Monitoring and review procedures
• Reporting commitments

Glossary

Unrestricted reserves

Funds freely available to spend on any of the charity’s purposes.

Restricted reserves

Funds allocated and restricted for a specific purpose as specified by the grant maker or donor, within the wider objects of a charity.

Document Control

Title: Birmingham Museums Trust Reserves Policy
Version: 2.0
Current Status: Reviewed 22nd October 2025
Live date: 23rd October 2025
Review date: Annually in February: Board of Trustees
Owner: Finance Director
Supporting procedures, policies and documents: Not applicable