FYA Annual Report and Accounts 2020 - 2021

RESERVES POLICY AND
RESERVES POLICY
GOING CONCERN
Fitzrovia Youth in Action
Annual Report and Accounts 2019 - 2020
26
FYA is currently dependent on grant funding to sustain its activities, because earned income through its
trading subsidiary alone would not allow it to continue operating.
The FYA Board has agreed to keep a certain level of unrestricted financial reserves aside and outside of
the financial planning process for two primary purposes:
To avoid closure and ensure that main operations can continue in the short term if:
Grant income becomes short; or
Unexpected costs arise
The main concern of the Board in this scenario is that staff can continue working, primarily to secure new
funding.
To ensure that all costs could be met during a wind up in the case where a funding shortfall persists to
the point where FYA ceases to be a going concern.
The main concerns of the Board in this scenario are:
Staff continue to be paid during their notice periods;
All financial commitments are met; and
The young people engaged with FYA are supported to move on to other services.
Currently, reserves set aside for these purposes are £156,000, the Board believes this level to be
appropriate. Not all unrestricted fund balance is considered as reserves; unrestricted funds not held as
reserve, and not needed to fund programmes, are allocated to funding overhead and support costs in the
FYA budgets and forecasts.
Restricted funding for programmes is usually secured 6 to 12 months in advance. Unrestricted funding for
support and overhead costs is more difficult to obtain and is less predictable and as such, FYA is at a
higher risk of running short on unrestricted funds for overheads. As a result, the Board set the reserves
with particular reference to overhead and support costs which include fundraising activities.
The current level of reserves available are held as follows:
a. 2.5 months available contingency fund for continuing operations in the case that
general funding falls short of requirements or for large and unexpected costs. In the
event of a general funding gap, and on the assumption, projects are running using remaining restricted
project funding, based on the current average monthly cost of overheads, this would fund an additional
2.5 months of overhead expenditure whilst additional funds are sourced. After this period, if no
further funds were secured, a two-month winding up period would begin (see below).