“Contingency” Reserve Fund
The corporation (strata / condo) finances’ second required fund, as per the Strata Property Act (SPA) in British Columbia (BC).
It is a fund for a special type of common expenses, expenditures that occur less often than once a year or that do not usually occur, or every two (2) fiscal-years or more.
Reserve fund planning is for an active component inventory of major repairs and replacements. A contingency is not a component.
With active reserve fund planning (and the production of RFSa | DRs), the management of this restricted monies fund improves by changing the focus from end-of-calendar year to multiple fiscal-years at a time, and the qualifier ‘contingency’ no longer makes sense.
Fundamentally, a “contingency” refers to trades’ and engineers’ work, and is for the part of their contract that has yet to be planned. It is added to the contract for potential eventualities.
The reserve fund’s risk-management requires scheduled planning of its accumulated monies in investments that come to maturity with concern for available liquidites, to meet the timing of expenditures, and of regular and special contributions to meet the requirements of long-term major repairs and full | partial replacements of components, systems and elements.