Reserves

When might I use it?

Spending your reserves, if you have them, is a possible alternative to seeking other investment or funding in any situation. However, this is a risky option if you don’t have large amounts in reserve. Many organisations aim to maintain a specific level of reserves to guard against a sudden drop in income and cover possible costs of closing the organisation.

Where can I get it from?

Reserves come from income generated through trading, donations or unrestricted grants.

Pros

• The investment does not have to be repaid
• If the investment is successful, you get all the profits or surpluses  

Cons

• If the investment is unsuccessful, you lose the money
• You are deciding whether to invest in yourself – an outside investment shows that someone apart from you believes your idea is worth investing in