Free policy template · CC BY 4.0

Reserves and Investment Policy

What the association does with money it isn't spending yet, and who decides.

Version
1.0
Last reviewed
2026-08-10
Review
Annually, at the AGM
Licence
CC BY 4.0

Most P&Cs never need this policy. Some — after a capital campaign, a big fete year, or a bequest — suddenly find several hundred thousand dollars sitting in a transaction account earning nothing, and no written basis for doing anything else with it. This is the policy for that committee.

It is deliberately conservative. It permits exactly two things — at-call accounts and term deposits with Authorised Deposit-taking Institutions — and prohibits everything else outright. That isn't timidity. Funds raised from a school community for a shade sail are not risk capital, and a volunteer committee that turns over every year or two cannot responsibly monitor anything more complicated.

The two ideas worth understanding before you adopt this

The protected limit is per institution, not per account. Australia's Financial Claims Scheme protects deposits up to a set limit per account-holder per ADI. Opening three accounts at the same bank doesn't triple your protection. Spreading across separately-licensed institutions does — and several familiar brands share a single licence, so check.

Laddering buys liquidity without penalties. Staggering term deposits so something matures every few months means you can reach funds on a predictable schedule instead of breaking a deposit and forfeiting interest.

This is not financial advice

This template is a governance framework — how your committee decides, who approves, and what gets reported. It deliberately names no institution, quotes no rate and recommends no allocation, because those change constantly and because recommending them isn't something a policy template can responsibly do. Confirm current limits, rates and product terms yourself, and take advice from your accountant or auditor on anything material — including tax on interest.

How to adopt it

  1. Fill in the blanks. Everything in [square brackets] is yours to set. Type straight into them below and your answers come through in the Word or PDF download — then read what to change before you put it to a vote.
  2. Circulate it with the agenda so members can read it before the meeting. A policy sprung on the room gets deferred.
  3. Move it, second it, record it. Adopting a policy is an ordinary motion. Use this wording:

That the Association adopt the Reserves and Investment Policy (version 1.0) as circulated, effective immediately.

Record the version number in the minutes. When you revise the policy later, that number is what tells you — and your auditor — which text was in force when a decision was made.

The policy

Reserves and Investment Policy

1. Purpose

A successful fundraising year can leave [association name] ("the Association") holding substantial funds that are not needed immediately. This policy sets out how much the Association holds in reserve, what it may do with funds beyond that, and the controls that apply to moving them. Its aims are capital preservation first, access to funds when projects need them second, and return third — in that order.

2. Principles

  1. The Association is not an investor. Its funds are raised from the school community for the benefit of the school community, and are held to be spent. Reserves exist to smooth timing and to fund projects, not to accumulate.
  2. Capital preservation comes first. The Association does not accept risk to capital in exchange for return.
  3. Only simple, transparent products. The Association invests only in at-call deposit accounts and term deposits with Authorised Deposit-taking Institutions (ADIs).
  4. Volunteers must be able to run it. Any arrangement that cannot be understood, monitored and handed over by an incoming treasurer in a single sitting is unsuitable, whatever it returns.

3. Permitted and prohibited investments

  1. Permitted: transaction accounts, at-call savings accounts and term deposits, in each case with an ADI, held in the Association's own name.
  2. Prohibited, without exception: shares, managed funds, ETFs, property, cryptocurrency and digital assets, foreign currency, derivatives, loans to any person or entity (including to members, to the school, or to another association), and any product where the capital value can fall or where returns are not contractually fixed.
  3. The Association does not borrow, does not provide guarantees, and does not pledge its funds as security.

4. Deposit protection and concentration limits

  1. The Association holds no more than the Financial Claims Scheme protected limit — currently [$250,000] per account-holder per ADI — with any one institution, including balances held in transaction accounts at that institution.
  2. Where the Association's funds exceed that limit, the excess is placed with additional, separately-licensed ADIs so that the whole balance remains within protected limits.
  3. The Treasurer verifies, before opening an account, that the institution is a separately licensed ADI and not a brand operating under another ADI's licence, since brands sharing a licence share the one protected limit.

5. Liquidity

  1. The Association maintains at least [$__________], or [three months] of budgeted expenditure, whichever is greater, in at-call funds available without notice or penalty.
  2. Funds committed to an approved project are not placed in a term deposit maturing after the date the project needs them.
  3. Where term deposits are used, terms are staggered so that a portion matures at regular intervals — [at least every six months] — giving access to funds without breaking a deposit.
  4. The Treasurer notes that early withdrawal from a term deposit generally requires notice — [commonly 31 days] — and incurs an interest penalty. Breaking a deposit requires executive committee approval and is reported to the next general meeting.

6. Choosing an institution

When selecting or reviewing an institution, the Association weighs, in order:

  1. whether the account supports genuine dual authorisation, in which one signatory initiates a transaction and a second independently approves it using their own credentials — an account that cannot do this is not eligible, whatever it pays;
  2. whether administrative changes, including adding or amending a payee, also require two people;
  3. whether the institution offers accounts to incorporated not-for-profit and community organisations, with reasonable identification requirements for volunteer signatories;
  4. fees; and
  5. the interest rate offered.

7. Authorisation

  1. This policy, and any change to it, is adopted by resolution of a general meeting of the Association.
  2. Opening or closing an account, and placing or renewing a term deposit within this policy, is approved by the executive committee and reported to the next general meeting.
  3. All transfers between the Association's accounts, and all placements and redemptions, are subject to the dual authorisation requirements of the Association's [Financial Controls Policy].
  4. Any proposal outside this policy requires a resolution of a general meeting amending the policy first. There are no exceptions made "just this once".

8. Reporting and review

  1. The Treasurer reports at every general meeting the balance of each account, the institution, the maturity date of each term deposit, and total interest earned year to date.
  2. The Association reviews rates and the maturity ladder at least [quarterly], and reviews this policy annually at the first meeting after the AGM.
  3. The Association records that interest is income of the Association and may have tax consequences, and obtains advice from [its accountant or auditor] where required.

9. Review

This policy is reviewed [annually, at the first meeting after the AGM], and whenever the Association's total funds move above or below [$250,000].

What to change before you adopt it

This template is deliberately conservative. Read these before it goes to a vote — a policy your committee can't actually follow is worse than none.

  • Your minimum at-call balance (clause 5.1). This is the number that stops a policy from becoming a trap. Work out what the Association actually spends in a term, then hold at least that, available today.
  • The concentration limit (clause 4.1). Written as the protected limit per ADI. Confirm the current figure — don't adopt a number from a template without checking it, because that number is exactly the one that matters.
  • How far you ladder (clause 5.3). Six-month intervals suit an association with ongoing projects. If your funds are earmarked for a single capital project with a known date, match the maturity to the date instead.
  • Whether you allow term deposits at all. A small P&C with $30,000 should probably run a single at-call account and delete section 5 entirely. Complexity has a real cost in volunteer hours and handover risk.
  • Your constitution and state body rules. Some constitutions restrict what an association may do with its funds, and some state P&C or P&F federations have their own requirements or model rules. Those govern.
  • Tax and reporting. Clause 8.3 is a placeholder, not advice. Whether interest affects your association's tax position depends on its structure and endorsements — ask your accountant before you rely on it.
Not legal advice

These templates are general information for Australian school parent bodies. Your constitution, your state's education department, your state P&C or P&F body, your incorporating legislation and your insurer may all impose requirements that override anything here. Where a policy touches money, children or personal information, have someone qualified look at it before you rely on it.

Use it, change it, share it

Licensed CC BY 4.0. You may copy, adapt and redistribute this policy — including for your own association's use — as long as you credit the source. A line reading "Adapted from the Bilby Bunch open policy library (bilbybunch.com/policies)" in your policy footer is plenty.

Why dual authorisation outranks the interest rate

Clause 6 puts banking controls above return when choosing an institution, and that ordering is deliberate. The difference between a good rate and an average one on $250,000 is real but modest. The difference between an account where two people must approve every movement and one where a single login can empty it is the difference between a controlled association and an uncontrolled one.

So the question to ask a prospective bank is not "what's your rate for not-for-profits". It's: can one signatory initiate a payment and a second, separately, approve it with their own credentials — and can we require two people for adding or changing a payee? If the answer is no, the account fails at clause 6.1 and the rate is irrelevant.

Related

Policies that go with this one

Governance

Conflict of Interest Policy

A parent's business quotes for the fete. Someone's partner applies for the canteen role. This is how you handle it properly — and prove you did.

 Money

Financial Controls Policy

Two signatures, clear limits, and a bank account nobody can operate alone. The policy that keeps volunteers safe as much as the money.

Adopting a policy is a motion.

Bilby Bunch puts the motion, the vote and the minute in one place — so the policy you adopt tonight is still findable, with its version and its date, three committees from now.

Start free See the demo →

← All policy templates