Definition

Noun: A sum of money, typically derived from a company's or organization's profits, that is set aside and not used for regular operations or distributions. Its primary purpose is to provide financial security and cover potential future expenses, losses, or unforeseen payments.

Usage

The term "reserve fund" is used to describe a specific pool of capital designated for future needs. It functions as a financial safety net. * The board voted to allocate 10% of this year's profits to the reserve fund. * A healthy reserve fund is essential for a condominium association to pay for major repairs. * The company dipped into its reserve fund to cover the unexpected legal settlement.

Advanced Usage

• "To build up a reserve fund": To gradually increase the amount of money in the reserve through regular contributions.
  • The nonprofit is trying to build up a reserve fund to ensure its long-term stability.
• "To be drawn from the reserve fund": To be paid for using money from the reserve.
  • The cost of the new roof will be drawn from the reserve fund.

Variants and Related Words

• Reserves (n): Often used synonymously with "reserve fund," though it can be a broader term encompassing various types of set-aside assets.
• Contingency Fund (n): A very similar concept, specifically for unexpected events.
• Sinking Fund (n): A type of reserve fund where money is accumulated over time to repay a debt or replace an asset at a future date.

Synonyms

• Nest egg
• Financial cushion
• Rainy-day fund

Related Phrases

• To tap into the reserve fund: To access and use the money in the reserve fund.
  • They had to tap into the reserve fund during the economic downturn.

Noun

1. funds taken out of earnings to provide for anticipated future payments