VSO 2021-22 Annual Report

The reserves policy prescribes the appropriate level
of reserves that should be available, and the actions
trustees are expected to take to maintain reserves
at an appropriate level. The policy insulates VSO
against volatility in income and uncontrollable
fluctuations in operating expenditure. It helps us
deal with any setbacks and provides the flexibility
to take advantage of strategic opportunities.
Despite the challenges of the past 2 years, our
general fund is only 6% lower at the end of 21/22
than four years ago, attesting of VSO’s active
management of financial sustainability.
Closing reserves position 20/21
£’000
21/22
£'000
Restricted 8,236 3,738
Unrestricted: general fund 12,821 11,882
Designated: fixed asset fund 361 231
Designated: pension deficit (2,286) (567)
Designated: change programme 522 365
Designated: income generation 1,983 1,643
Designated (total) 580 1,672
The designated change programme fund
represents the unrestricted funds the trustees have
earmarked to continue to deliver organisational
change throughout the organisation.
The designated pension deficit fund matches
the provision recognised for VSO’s agreed
contributions to the deficit funding arrangement
for the Pensions Trust Growth Plan. The deficit has
reduced significantly this year following the triennial
valuation at the end of September 2020 resulting in
a sharp reduction in future contributions necessary
to eliminate the deficit. This is the outcome of
past year contributions and the de-risking strategy
put in place by the Pensions Trust on behalf of
participating employers in the Plan (see note 19).
The designated income generation fund is to be
invested in income generating activities over the
next year. This fund will support unrestricted income
growth and the income portfolio diversification.
For more information: Financial statements,
• Note 12 Provisions for liabilities
• Note 13 Restricted funds
• Note 14 Unrestricted funds
• Note 19 Pension costs
Total Reserves 21,637 17,292
At 31 March 2022, VSO’s general reserves stand
at £11.9 million, which is £2.9 million above the
£9 million target level set out in VSO’s reserves
policy. This high level has helped us manage
the multiple shocks and stresses encountered
since March 2020, especially the reduction in
available resources linked to the COVID-19 crisis
and the political environment in the UK. Trustees
have planned to use the surplus in the coming
years as the organisation adapts to the current
environment. The general reserve will allow to
complement the income generation fund to
finance a £2.8m investment in Public Fundraising
over the next 3 years and the digitalisation of a
number of VSO key processes.
40 VSO Annual report