How a treasury policy can help schools do more with their cash

At Insignis, we’re proud to mark the International Day of Education and to work with a range of schools, trusts, and educational organisations across the UK. These institutions play a vital role in shaping the future, and we understand the financial pressures they face daily.

From hiring new teachers to funding facility improvements and educational trips, every pound matters. But there’s one lever that’s often overlooked: how cash reserves are managed.

The potential of interest

Let’s say your school or trust holds a reserve fund of £2 million. Placing that in a savings product offering 5% interest* could generate £100,000 in additional funds.

That amount could:

• Fund a new teaching role
• Provide new educational materials
• Cover the cost of student enrichment programmes

Given today’s interest rate environment, this kind of return is achievable — yet many schools are not taking advantage of the opportunity.

Why now?

Over the past decade, persistently low interest rates made saving less attractive. But since 2022, rates have increased and remained elevated through 2023. As of early 2024, the Bank of England base rate remains at 5.25%, and although some forecasts anticipate potential rate cuts later this year, now is a strong time to explore fixed-term savings options.

Managing risk responsibly

Of course, managing cash reserves — especially when sourced from government funds or private donations — carries responsibility. That’s why it's critical to have a clear risk management strategy in place.

Common challenges faced by schools and trusts include:

• Insufficient reserves or irregular cashflow
• Over-reliance on a single source of income
• Lack of investment management policies

Fortunately, cash is a liquid, lower-risk asset, and when placed with a diverse range of deposit-takers, it can still be eligible for FSCS protection (up to £85,000 per institution, if eligible).

In addition to checking FSCS eligibility, consider the credit rating and investment grade of each institution. The higher the rating, the lower the risk of default.

Building a Treasury Policy

Creating a simple treasury policy can help schools and trusts:

• Define investment powers and limits
• Evaluate savings products and deposit-takers
• Build confidence among trustees and stakeholders

Start by assessing:

• How much cash can be placed in savings
• Your organisation’s liquidity needs
• What level of return you’re aiming for
• Your acceptable level of risk

For example, with a £2 million fund, you might decide to limit deposits to £400,000 per institution, or £85,000 if FSCS protection is a priority. Spreading funds across multiple deposit-takers can diversify exposure and reduce risk.

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