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31 May 2012

Financial reserves: what for?

Illustration for article: Financial reserves: what for?
To ensure the durability of its multi-year research programmes and secure support for families, the French Muscular Dystrophy Association (AFM-Téléthon) build up financial reserves to fund its actions.

The Téléthon, a vulnerable structure

Imagine that the huge storm which swept across France in December 1999 had happened on the weekend of the Téléthon. Most of the events organised to collect funds would have been cancelled, French people would have had other priorities rather than calling 3637 to make a donation and donations would have collapsed. Since it is concentrated over 30 hours, the Téléthon, which accounts for more than 80% of AFM-Téléthon's resources, is exposed to random events of all kinds.

A responsible management

This vulnerability requires a policy of building up financial reserves, otherwise the association would be taking risks with funding its actions, which, for the most part, are long-term operations. Therapeutic trials on humans, for example, can take several years and several more are needed before a new drug is released on the market. Similarly, the association employs some 150 healthcare and social welfare professionals who provide permanent support for families affected by a neuromuscular disease.

Profits reinvested for the benefit of patients

To ensure its efficacy, AFM-Téléthon invests its financial reserves while waiting to use them. The interest generated provides extra revenues for research and help for patients. The Board of Directors requires secured investments which are available at any time. Investment income is therefore chosen to meet these two criteria, with the help of the financial committee experts.