KCHC Annual Review 2023-24 WEB Singles - Flipbook - Page 35
2023/24 Financial Review
Items 1) and 2) on P34 are covered by holding nine
months (2022-23: 12 months) of operating expenditure,
and item 3) is covered by 9% (2023: 10%) of the equity
value of the investment portfolio.
Our policy requires us to hold free reserves within
the range of +/- 25% of the target. The targeted level
of reserves to cover these risks is £4.7M (2022/23:
£6.4M), comprising an operating risk component to
cover the first two items assessed as £2.7M (2022/23:
£3.9M), which is equivalent to nine months budgeted
expenditure for 2024/25, and a component for
investment risk of £2M (2022/23: £2.5M) assessed
based on applying historic market volatilities to the
value of the Charity’s investments.
The actual value of the general reserve of £4.9M
(2022/23: £5.6M) represents 104% (2022/23: 89%) of
the target.
B) Unrestricted designated funds
At 31 March 2024, £14.9M (2023: £13.5M) was held in
designated funds.
£9M (2023: £9M) was held in designated funds set aside
for named clinical specialties or hospital wards, where
the donor has indicated they wish the funds to be used
for that purpose. The Trustees expect these funds
to be spent within a reasonable timeframe – there
is a process in place for closing funds where there
is no further planned activity and transferring any
remaining balance back to general funds.
Spending takes place with advice from ‘Designated
Fund Advisors’, subject to compliance with the
Charity’s policy and procedures. Funds are available
for spending in full, with no reserves figure set.
Designated Fund Advisors are encouraged to fundraise
to replenish funds for future developments.
A further £4.9M (2023: £3.8M) is designated as strategic
purpose funds. We wish to develop our capability
to support the Foundation Trust in delivering major
strategic and transformation projects. These projects
typically have an extended lead time and require
time and resources before progressing for approval
and fundraising. The value of the reserve is based on
the Charity’s medium-term grant-making plan, with
the expectation that further funds would be raised
from fundraising appeals to fund a series of strategic
projects. The value of this fund reflects the amount
required over the next three years to support the
Charity’s strategy and allow regular and sustained
investment in growing the Charity and increasing its
ability to support its beneficiaries.
A further fund to support the pump priming of pipeline
capital projects was established in 2018/19, and an
initial sum of £1M was transferred. Capital projects,
by their nature, require a large amount of funding to
be raised over a relatively short period. The Trustees
believe that in order to support King’s progress in
projects currently at the planning stage, funds should
be set aside for this purpose. The fund was not
drawn down during the year, although several capital
projects are now being evaluated.
C) Restricted funds
At 31 March 2024, the value of restricted funds was
£3.3M (2023: £3.8M) – the name and value of each
fund above £100K is provided in Note 2.1. For these
funds, we will comply with the specific requirements
of donors and spend their donations on the restricted
purpose specified. Donations are held in restricted
reserves until suitable spending plans have been
identified and approved.
D) Endowment funds
During 2023/24, the Charity Commission agreed to lift
the restriction on the £100K received from the will of
Virginia Rowbotham, which was transferred to general
funds. Details are provided in Note 2.3a.
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