Financial health, contingency & reserves

SleepEasy explanation: PIRC operates an income prediction tool, or “SleepEasy”, that takes into account likelihood of receiving grants/consultancy over different timescales (quarterly). This gives a figure for likely income that has not yet been confirmed, but is in process. These figures are integrated into our cashflow spreadsheet.

Financial Health

PIRC is in good financial health—and therefore not in Contingency—if the following is true:

We have 9 months confirmed cashflow and 12 months SleepEasy (predicted) cashflow. Including 4% of turnover / min. £10,000 going into reserves per year.

Contingency

We will carry out the following contingency measures if any of the following conditions are met:

Under 12 months SleepEasy (predicted cashflow):

• Caution with spending, particularly if any increased spending can’t be found from another budget line.

Under 9 months confirmed cashflow:

• Instigate simple cost savings with the team.
• Move into measured spending / budget review.
• Plan for measures below should income not come in as expected.

Under 6 months confirmed cashflow:

• Financial Trustee Group / Board meeting review.
• Wider budget review including team hours / pay rises etc.
• Increased team focus on fundraising.
• Identify existing funders who may be able to help.

Under 3 months confirmed cashflow:

• Move to bare bones operations (including no / hours of  team members)
• Go to existing funders for help.
• Resources Group will be responsible for ensuring all of the above is carried out.

Reserves

Sources for building reserves include:

• Net income from consultancy;
• Dedicated reserve budget lines from grants;
• Income from donations and sales.

Achievable reserve targets should be set as part of a long term plan and built into fundraising going forward. A key indicator of financial health would be that a reserves plan is in place and working, however modest the target.

Reserves target:

• 3 months running costs
• To be achieved by a simple annual target such as £10,000 per year or 4% of turnover.

Progress is monitored as part of PIRC’s financial reporting and reviewed as needed.