Reserves, Funds & Charitable Gifts

Governance Policies and Procedures

Policy Number: GO8.1.4 | Policy Type: Administrative | Approval Date: May 2026

INTRODUCTION:

The Ontario Library Association (OLA) Reserves and Funds are integral to the work of the Association and are key components of the Financial Planning process.

Definitions

Capital includes both major capital (assets) and minor capital (non-tangible assets) such as software development.

Capital Reserves are asset depreciation realized on an annual basis for the use of replacing loss. Capital reserves can also include a pre-determined deposited amount for planned capital projects.

Externally Restricted are funds which the Board accepts from a donor, who establishes specific purposes and imposed restrictions through a Terms of Reference with the OLA. As such, OLA merely administers the program. Changes to the fund must be pre-approved by the donor or heirs.

Funds are envelopes of money designated for a specific purpose by the Board. These may be internally or externally restricted.

General Fund is the OLA non-designated fund under the operations purview. All donations not designated are received into this account. In marketing this fund may be referred to as “Library Champion”.

Internally Restricted are funds with specific purposes and imposed restrictions on use, which are established by the Board and under the Board’s purview to amend. The Board may merge funds, change the Terms of Reference or criteria with a standard majority vote. In addition to Internally restricted program funds, a Reserve Fund, or Capital Fund are considered Internally Restricted.

Reserves are funds invested to meet future, often unexpected, financial obligations or to ensure stability of OLA. These funds may be capital, operational, or for specific restricted purposes.

Responsibility

The OLA Board of Directors is responsible for approving any new Internally or Externally Restricted Funds, any new reserve accounts, and any Fund Development Campaigns.

The OLA Fund Development Committee is responsible for monitoring the Fund Program including any investments, charitable activities, and major campaigns of the Association.

The OLA Finance and Audit Committee is responsible for recommending new reserves and use as part of operational and capital budgets to the Board.

The Executive Director, Deputy Director, and Board Treasurer shall ensure that all funds raised by the OLA are invested with the advice of the Fund Development Committee, any contracted investment professionals, and approved by the Board of Directors.

FUNDS:

The OLA will work with staff and partners to identify and develop restricted funds to support the mission of OLA.

Internally Restricted Funds

The Board will establish any internally restricted funds by resolution. A Terms of Reference (TOR) for the fund will be drafted by the staff or committee requesting creation of the Fund. The TOR is reviewed by the Fund Development Committee, who will then make a recommendation to the Board.
All internally restricted funds TOR will be reviewed at least every 5 years to ensure they continue to meet the needs of the Association, the mission and the current Strategic Plan.
The Board may close a fund, merge funds, or reconstitute existing monies into new or other funds, based on the recommendations of the Fund Development Committee.

Externally Restricted Funds

The Board must first establish that the organization or entity making the offer of the donation is one they wish to have a long-standing affiliation with, and aligns with OLA’s mission and priorities.
The Executive Director will be responsible for developing the MOU with the party and presenting this for review by the Fund Development Committee, and for approval by the Board. It will include:

a). how funds will be allocated,

b).the purpose of the fund

c).who will act as the donor if the individual dies or organization ceases operation,

d). how the MOU can be amended and/or cancelled.

e). the date or event when the externally restricted status changes to internally restricted. E.g. This may be after no members of a donor’s family or company exist to update the MOU, or a period of years.

3. Every 5 years the Fund will be reviewed to ensure that it continues to meet the needs of the Association, the mission, and current Strategic Plan. The Fund Development Committee will make any recommendations for changes to the Board in accordance with the amendment of clauses within the MOU.

4. Where possible, the priority is to have internally as opposed to externally restricted funds developed, and funds to be grouped by purposes, as opposed to named after individuals (e.g. Scholarship Fund versus numerous scholarship funds in the name of the donor).

5. Externally Restricted Fund donations may be grouped into Internally Restricted envelopes if the donation is expensed within 3 years, and there is an Internally Restricted Fund of a similar envelope. In this case, the Internally Restricted Fund can have criteria for that period which adds in additional awards for a purpose (e.g. Scholarship fund to serve the standard ToR, plus one additional award for a specific, yet similar purpose).

Charitable Gifts

As a charitable organization, the Board and Executive Director will take great care to ensure the practices and reporting are auditable and according to standards. OLA will make applications as a charity for grants and funds, as well as provide receipts for the donations provided by others.

The OLA will provide an official tax receipt for any donations over $25.
Cash, securities, or In-Kind donations are accepted when meeting CRA standards.
Donations may be made directly to the OLA or through a partner platform (e.g. Benevity, CanadaHelps, etc). In the case of third-party donations, that entity will provide the receipt.
Donations may be Unrestricted or Restricted, and the Finance Department will maintain a clear record of donation purposes for annual auditing.

a). Unrestricted donations will be deposited in the General Fund for use in keeping with the TOR of the General Fund.

b). Restricted donations for which there is an appropriate Restricted Fund will be deposited in that Fund for use in keeping with that Fund’s TOR.

c). Donations for a specific purpose, which there is not an appropriate restricted fund, will be deposited in the General Fund for use as outlined in the donation.

5. Thank you’s and acknowledgement may be provided at various levels by the OLA and are at the Executive Director’s purview.

6. Gifts for naming or partnership rights are not charitable in nature, rather Sponsorship, and must be approved by the Board.

Use of Funds

Prior to the use of any Funds, the Executive Director will analyze the reason for the use and confirm it is consistent with the purpose of the Fund.
The Executive Director will ensure that all Funds are retained in an auditable format with a clear record of all interest, donations, and expenses.
The Board may designate how interest on Funds will be allocated, including investing into:

a). the same fund

b). other funds/reserves

c). operational revenues or

d). General Fund.

4. The Executive Director may designate how the General Fund may be allocated, including operational expenses or invested in the operational or capital reserves.

5. Payments, when possible, will be taken directly from a Fund, but may have payables retained until such time as an investment or other access is more beneficial to the OLA.

AWARDS, GRANTS, AND SCHOLARSHIPS

As a charitable organization, the Board may:

develop awards, grants, or scholarships that meet the OLA Articles and charitable clauses
make donations to qualified donees, or provide awards, grants, or scholarships to members, partner associations, or other organizations that apply for financial support from the Ontario Library Association.

Limitations

a). Grants will only be considered to promote the interests of the Association and the interests of libraries in the Province of Ontario.

2. Responsibility

a). It shall be the duty of the OLA Board, via the Awards and Scholarships Committee process, to approve any awards, grants, or scholarships.

b). In special circumstances, the OLA Executive may grant up to $1,000 subject to Board ratification at a later date.

3. Budget

a). As a part of the budget process, OLA executive staff shall determine the sum deemed reasonable for awards, grants, and scholarships as well as the source of the funding.

b). Any monies transferred from a Fund or Reserve that are not used will be returned to that Fund or Reserve.

4. Applications

a). An application process, including directions regarding how applications are evaluated, will be developed for each award, grant, or scholarship.

b). Applications must include the amount requested and information supporting how the applicant or application matches the award, grant, or scholarship criteria. As appropriate, a description of what the value to Ontario libraries would be, should also be included.

c). The Board will review the application and evaluation criteria every five years. Where appropriate, the administrative process and timelines of awards, scholarships, and grants will follow a similar template.

d). Applications will be approved by the Board, based on recommendations from the Board’s Committee for Awards & Scholarships.

5. Recognition

a). All recipients of funds must agree to recognition of OLA’s contribution. The OLA Board will set the conditions for recognition.

6. Agreements

a). The receiving agent or agency must sign a formal letter of agreement. All granted funds are conditional on the funds being used in the manner approved. The grant is subject to the applicant accepting the conditions set out in the letter of agreement.

RESERVES

The OLA maintains operational and capital reserves to ensure financial flexibility, sustain operations, and pay for nonrecurring expenses. Reserves are not intended to replace a permanent loss of revenues or eliminate an ongoing budget gap.

Capital Reserves

Based on the annual audit, an amount equal to amortization and depreciation of tangible and intangible assets will be invested in the Capital Reserves account.
Capital Reserves can be used to replace capital assets when these are either:

a). Included in an approved capital budget; or

b). Requested a special recommendation from the Finance & Audit Committee.

3. When a capital or minor capital software investment is required, an annual pre-purchase investment may be made into this reserve to ease the burden of single year funding of a project.

Operational Reserves

The Board will designate an Operational Reserve account that will hold 75% of the typical operational costs, including never having less than 6 months of wages and benefits.
As a part of the budget process, the target minimum for the account will be calculated each year. If the reserve account is below the minimum threshold; the Board will adopt a plan to rebuild the fund to its targeted level.
Best practice of budget planning and long-term planning is to include a designated portion of each budget to be invested in the operational reserves.
Any surplus from any budget year will be invested in the Operational Reserves.

Use of Reserves

A Board resolution is required for authorization to create or access any reserve, including investments, outside of preauthorized Fund or budget expenditures.
Prior to the use of any reserve funds, a report will be provided to the Finance and Audit Committee. The report will outline how the funds will be used and how they will be replenished, as appropriate. The recommendation from the Finance and Audit Committee will go to the Board.
As part of the budget process, the Finance and Audit Committee may recommend the Board a loan of reserves and repayment process. See G5.1.4: Loans and Debt.

INVESTMENTS

Based on the recommendations of the Fund Development Committee, the Board may purchase investments with Canadian banks or investment firms.

A Board resolution is required for all investment and/or cashing of investments, be it in full or part.

No less than two signing officers, including one of either the President or Treasurer, may bind the investment on behalf of the Board.

No less than two signing officers, including one of either the President or Treasurer, may withdraw funds on behalf of the Board.

Any additional signing officer for the investment may be the additional signatory of binding or withdrawal of funds.

LOTTERIES AND GAMING CONTESTS

Any lotteries or gaming will meet the AGCO licensing standard, or when in person, the municipal licensing standard of the city of the program.
Board members, employees and members of their immediate family’s eligibility in any lottery or gaming contest will be designated within the Rules of Play approved by the AGCO or Municipality.
Lottery and contest rules shall be published on the OLA or partner raffle website and be available in print to those by request. Rules must follow all relevant legislation and licensure.
Lotteries and Gaming will only be held in accordance with the OLA Articles and charitable clauses.

Related Documents

Finance Policy 5: Loans and Debt.

Revised: May 2026

Date for Review: 2028; Every 3 Years