Public prefer charities to keep low cash reserves

Public prefer charities to keep low cash reserves

Just one in 17 people think charities should save more than a year’s expenditure for a rainy day, a new study shows. A third of people favour reserves of less than six months’ spending, while only one in ten agree it should be whatever a charity decides.

The poll of 1,000 people, out today, asked how much money charities should keep in case their income fell and just 6% said over a year’s worth of expenditure.

One in five people felt 4-6 months was wisest, while another fifth preferred their charities to keep back six months to a year.

12% were happy to leave it to whatever the charity felt was right, while 19% were happy with less than three months and 21% were unsure.

People were also asked how much a charity with an annual income of £12m should keep in reserves to see if their answers differed when talking in money rather than months. The results showed even more enthusiasm for smaller reserves, with no one saying £24m was the right amount of reserves and just 2% opting for the full year’s income of £12m.

Nearly half were comfortable with £3m or less, while 12% picked £6m or £9m. Many were again reluctant to pick a figure, with 16% keen to leave it to the charity and 22% saying they didn’t know.

  • 5% of people would choose 1-2 years, while 1% would say more than 2 years
  • 20% of people say 4-6 months, while 21% think 6 months to a year
  • 17% think 1-3 months, while 12% were happy with whatever the charity decided and 21% were unsure
  • For a £12m charity, people are more cautious. No one said £24m and only 2% said the full £12m. The rest were: £1m 24%, £3m 23%, £6m 9%
  • 16% were happy with whatever the charity felt was right and 22% were unsure

nfpSynergy’s Driver of Ideas, Joe Saxton, said:

“It’s interesting to see that hardly anyone feels charities should keep back at least a year’s expenditure in reserves. The public want to think that the donations they make are being used to do good, not sitting and gathering dust.

People are even keener on low levels of reserves if the actual amounts of money are discussed rather than the length of time. Just under 20% of the public says three months or less is the right amount, but nearly 50% say £3 million or less when asked about a £12 million charity. The moral of this is to always talk about the length of time reserves might last, rather than specific amounts of money.”

Please see the attached slides for more details.