Building a treasury policy for a not-for-profit organisation

Why every non-profit needs a strong treasury policy

For non-profit organisations, the way cash is managed can have a direct impact on the causes you support. With many charities and non-profits operating lean teams, relying on grants or donations, and balancing complex funding cycles, it’s essential to have a clear and practical strategy for managing cash reserves.

A well-structured treasury policy doesn’t just support financial prudence — it helps protect your organisation’s reputation and improves your ability to plan ahead. With interest rates still elevated and a changing economic environment, now is a good time to take stock and strengthen your approach.

Understanding today’s savings landscape

Following over a decade of low interest rates, the financial environment has changed significantly since 2022. With the Bank of England base rate now at 5.25% and savings products offering more attractive returns, non-profits have an opportunity to make their cash reserves work harder — provided they have the right controls in place.

Creating a treasury policy helps your organisation assess which products to use, how to manage risk, and how to generate return — all while maintaining liquidity and transparency.

Managing risk in a non-profit environment

Risk management is a key part of governance. For non-profits, common risks include:

• Insufficient reserves or unstable cashflow
• Over-reliance on a small number of funding sources
• No clear investment or savings policy

Treating cash as an asset class — one that can deliver stable, low-risk returns — is becoming more common. Trustees should also be familiar with the Financial Services Compensation Scheme (FSCS), which protects eligible deposits up to £85,000 per authorised institution.

Additionally, understanding credit ratings and investment grades can help your organisation determine which deposit-takers are most suitable. Institutions rated AAA by Moody’s, S&P, or Fitch are generally considered the most secure.

Building your treasury policy

An effective treasury policy helps you:

• Set a framework for investment decisions
• Manage your resources responsibly
• Comply with regulatory requirements

You’ll need to consider:

• How much cash is available to deposit
• The timing of returns and your liquidity needs
• Your eligible FSCS protection
• The credit rating of deposit-takers

Once these elements are in place, define your interest objectives and risk appetite. Consider who is responsible for implementation and how performance will be measured.

Example: If your charity holds £5 million in reserves and wants to cap deposits at 20% per institution, you may set a £1 million limit per bank — adjusting this downward if the bank's credit rating doesn't meet your criteria.

Using a cash management platform to support your strategy

A platform like Insignis can help your organisation put its treasury policy into action. With one-time onboarding and 24/7 access to a wide range of easy access and fixed-term products, Insignis simplifies:

• Diversifying deposits
• Tracking interest and balances
• Accessing competitive rates
• Generating detailed reports for trustees and regulators

If your team is small or stretched for time, using a platform can reduce the admin burden — freeing you to focus on your core mission.

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