Southwark Report 2020_NEW final -Single pages

Reserves Policy
The Trustees have reviewed the reserves policy of the Archdiocese and it has been agreed that it will be based
around the level of free reserves.
Definition of free reserves
The diocese’s free reserves are those funds which can be freely spent on the Archdiocese’s charitable purposes.
Free reserves will therefore normally exclude tangible fixed assets because these assets are used by the charity to
deliver their activities and as such cannot be sold to meet a funding deficit. Amounts already set aside for essential
future spending (designated funds) are also excluded from free reserves. Free reserves therefore are defined as
total net assets less restricted funds less tangible fixed assets.
Definition of unrestricted expenditure
Unrestricted expenditure is defined as expenditure which is made by the Charity to further its objects, to be spent
as the trustees see fit, i.e. where the application of funds is not restricted by the donor.
Reserves Policy
The policy adopted by the Trustees is that the level of free reserves across the Charity should represent 12 to
24 months of unrestricted expenditure. At the 31 December 2020 the level of free reserves was £48.6 m which
represents 24 months unrestricted expenditure.
The policy will be subject to annual review.
For further detail on the Archdiocese’s reserves see notes 12 to 15 of the Accounts.
The Archdiocese has a number of restricted funds to be used for specified purposes totalling £13.3m (2019
£13.8m) which include:
Ecclesiastical Education Fund
This fund meets the costs of students at Seminaries training to be priests for the Archdiocese and
ongoing training for Clergy. Its income derives from investments.
Clergy Support Fund
A legacy specifically restricted to helping clergy in need has been invested and the income is applied
to the Clergy Support Fund. Income is also derived from the Clergy Support Campaign, which raised
over £261,000 in 2020. These funds are utilised in helping towards the costs of our retired and sick
clergy.
Mass Funds
Income received on investments provided by donors is paid to priests who offer Masses for the
intentions of the donors.
Education Fund
The Education fund represents the funds received on the disposal of school sites. These funds can
only be used in the costs of building or the costs towards building a replacement school.
Investment Policy
The Trustees have issued an Investment Policy Statement in accordance with the requirements of the Trustee Act
2000. The Trustees’ investment goal is to place emphasis on maximising total return through both income and
capital growth.
A new Sustainable Total Return Strategy was adopted in 2019, which built upon our ethical stance by addressing a
number of issues including fossil fuels and positive investing. The changes enhanced our approach to environmental,
social and governance practices and required each element of our portfolio to be able to demonstrate a positive
34