EIL Intercultural Learning

RESERVES POLICY

Approved and adopted by the Board of EIL Intercultural Learning on June 19th 2015 Updated May 20th 2017

Purpose of a reserves policy: The purpose of the Operating Reserve Policy for EIL Intercultural Learning is to ensure the stability of the mission, programmes, employment, and ongoing operations of the organisation. The Operating Reserve is intended to provide an internal source of funds for situations such as a sudden increase in expenses, one-time unbudgeted expenses, unanticipated loss in funding, or uninsured losses. The Board-set reserves policy requires:

1. Reserves to be maintained at a level which ensures that the organisation's core activity could continue during a period of unforeseen difficulty.

2. Operating reserves to be maintained in a readily realisable form, acknowledging that existing capital reserves are not in a readily realisable form, for example, in the property that houses the head office of EIL Intercultural Learning and the location in which our staff are based.

Calculation The calculation of the required level of reserves is an integral part of the organisation's planning, budget and forecast cycle. It takes into account:

• Risks associated with each stream of income and expenditure being different from that budgeted;

• Planned activity level; • Organisation's commitments.

By the end of 2019, the Board intends to have built a realisable operating cash reserve of at least € 50,000 by adding the following minimum amounts each year:

• €10,000in2017• €15,000in2018• €15,000in2019

USE OF RESERVES Use of the Operating Reserves requires two steps:

1. Identification of appropriate use of reserve funds. The CEO and staff will identify the need for access to reserve funds and confirm that the use is consistent with the purpose of the reserves as described

in this Policy. This step requires analysis of the reason for the shortfall, the availability of any other sources of funds before using reserves, and evaluation of the time period that the funds will be required and replenished. 2. Authority to use operating reserves The CEO will submit a request to use Operating Reserves to the Board of Directors. The request will include the analysis and determination of the use of funds and plans for replenishment. The organisation’s goal is to replenish the funds used within twelve months to restore the Operating Reserve Fund to the target minimum amount. If the use of Operating Reserves will take longer than 12 months to replenish, the request will be scrutinised more carefully. The Board will approve or modify the request and authorize transfer from the fund.

Reporting and monitoring The CEO is responsible for ensuring that the Operating Reserve Fund is maintained and used only as described in this Policy. The CEO will maintain records of the use of funds and plan for replenishment. He/she will provide regular reports to the Board of Directors of progress to restore the Fund to the target minimum amount. Accounting for Reserves The Operating Reserve Fund will be recorded in the financial records as Board-Designated Operating Reserve. Evaluating the policy The Board will undertake an initial evaluation of this policy after one year. Thereafter, the policy will be reviewed in full on a three-yearly basis, by the Audit Committee, or sooner if warranted by internal or external events or changes. Changes to the Policy will be recommended by the Audit Committee to the Board of Directors.