financial guidelinesfinancial guidelines
Stichting Kinderpostzegels Nederland's objectives
All the money that Kinderpostzegels receives, after deducting costs, goes to projects and programmes for children and young people. Kinderpostzegels meets Central Bureau for Fundraising rules concerning allowable fundraising costs.
risk
Most of the Kinderpostzegels’s income is derived from the annual children’s welfare stamps campaign. The failure of one such campaign would endanger the organisation’s goal, to fund projects. We want to minimise that risk, in order to be a stable and reliable partner for projects that we fund. Therefore:
- Kinderpostzegels does its best to raise additional income besides the children’s stamps campaign
- Kinderpostzegels maintains a financial buffer for the eventuality of poor results.
assets and earmarked reserves
Kinderpostzegels works on the principle that it should not be a savings fund or foundation. Capital growth is not an aim in itself, but the means we use to maintain the level of funds available for allocation to projects, while achieving gradual growth. Kinderpostzegels’s assets are spread over reserves, each with a specific goal. The reserves are as follows:
1. the continuity reserve
We want to be able to continue our work, even in the event of occasional disappointing results from the children’s stamps campaign. If that happened, we would have to organise a new campaign, which would cost money. For this purpose we maintain a buffer of 1 to 1.5 times the campaign and implementation costs. We call this buffer the continuity reserve.
2. equalisation reserve for projects
Disappointing results mean less money for allocation to projects and programmes. The equalisation reserve for projects exists to lessen the impact of major setbacks, so that money can be allocated to projects and programmes even then. The reserve amounts to 30% of total income minus total costs, excluding project grants. The figures are based on the average of the last three years.
3. the reserve for capital gains/losses on investments
Kinderpostzegels does not want its annual results to depend on stock market trends. Hence this reserve, which offsets losses from disappointing stock market investments. The buffer covers a maximum fall in prices of 40% for shares and 10% for bonds.
4. reserve fund for assets for business operations
Kinderpostzegels maintains this reserve according to CBF rules. The reserve is the equivalent of the amount of inventory and stock held for implementing the organisation’s objectives.
asset management
The proceeds from fundraising activities each year are spent on preparing new campaigns. This includes information about projects and the need to publicise our campaigns. In addition there are of course the grants made to projects funded by Kinderpostzegels. Lastly, money is needed to pay salaries and other office costs.
The assets held to offset the risk of financial setbacks are invested in savings accounts, short-term guaranteed structures, shares and bonds. From the longer term perspective, this investment mix minimises the risks and provides higher returns than simply leaving the money in a savings account. We use the income from investments to fund projects.
As far as possible Kinderpostzegels goes in for sustainable investment. We also observe the guidelines “Reserves Goede Doelen” (Reserves held by Charities) drawn up by the Association of Fundraising Organizations (VFI) on the basis of the Herkströter Commission’s proposals.
asset management
The invested assets are managed by an external asset manager, who submits a written report every quarter and reports back in person on the management operations every six months. This review includes an examination of whether the investments still fit in with the Kinderpostzegels’s investment criteria. Every year when the budget is discussed by the Supervisory Board, consideration is given to the question of whether any changes are needed in the asset and investment management.
A full breakdown of the investment results is provided every year in the annual report. This includes the average investment results over the last 10 years.
