Reserve Fund

A reserve fund is a pool of liquid financial resources specifically set aside to meet future obligations, unexpected expenses, or emergency situations. It typically consists of cash balances, bank deposits, or short-term investments that can be easily accessed when required, ensuring an organization’s financial resilience and stability. Such funds are commonly maintained by businesses, governmental bodies, and associations to finance repairs, maintenance, debt servicing, or to cushion the impact of economic downturns without disrupting normal operations. Example: A homeowners’ association (HOA) may accumulate a reserve fund from periodic member contributions to finance **large-scale repairs—such as roof replacements or road resurfacing—**thereby avoiding unexpected financial burdens on residents.