10 points for charities at risk of going under.
A lot of people are going under. Outside of Linkedin and the trade press nobody is talking about it. But it needs to be talked about - not least, the practicalities of it. I find the charities I’m working with have rarely even considered what closing looks like. I hope these points might be helpful if that’s where you are.
1) Charities: if you're in a pickle and you're heading towards insolvency, you need to stop before you get there. It's not a target. The point is to avoid it...
2) Funders: As a colleague pointed out to me the other day, there is an insanity to the fact that, the day before someone goes under, all their funds can be restricted. The day after they go under, there's no such thing, and the funds are just divvied up to pay off creditors. So, if you're crazy enough to demand fund restriction when charities are at crunch point, just be aware it'll be paying off the IT supplier anyway if they go under. Possibly before the staff.
3) Charities: paying your staff when you close shouldn't be optional (which includes redundancy). I'm starting to worry that some think it is. Please be aware that Government schemes are woefully inadequate. As I saw another wise LinkedIn-er say this morning, it is always better to make people redundant and halve your outgoings early, so that at least you can then pay people who have to leave. And your charity may survive.
4) Funders: If you have a policy of not funding people with more than eg. six months' 'reserves', how does this match to your turnaround time for applications? Have a think for a second about how that would work on a cashflow. I'll wait....
5) Charity trustees: A quick reminder to trustees that if you knowingly trade while insolvent, you could be liable for the company's debts. Yes, really.
6) Local authorities: Some of you have a policy of only 'pay the screamers' for small businesses. People regularly wait months for invoices to be paid. This is sometimes cultural, and sometimes truly intentional. Be aware that this almost always contributes to the death of a small charity if they have any LA funding at all.
7) Charities and trustees: The orderly closure of a vital charity is sad and difficult. The disorderly closure of a charity is also often deeply unjust - and has a considerably worse effect on your beneficiaries. It's always better to close while you can still do so properly.
8) Funders: Meanwhile, much as I talk about closure, I'm please to see that funders have been talking behind (the as-usual, closed) doors about supporting closures. That's good, and needs to be discussed properly. But the support being given to those who are in danger of closing - as I've pointed out in previous posts - has still received scant attention.
9) Charities: I'm helping charities who are in danger of closure at the moment - scenario planning, and ensuring that they have the best chance of survival and a plan for if things go south. You need that.
10) CEOs: Have an envelope in your top drawer with plans for the worst, and discuss it with trustees. It's worth it.
I often work with charities in trouble. The point is to have plans for the worst, and for the best. You need a clear plan for survival - a hit list of funding, a cost plan to squeeze as hard as you can, a way of engaging all your supporters and indeed, creditors. But you also need a plan to close in an orderly way. That ambiguity and uncertainty is stressful and difficult for CEOs and trustees. It can also be hard to think outside of the drive to survive and be realistic as well as hopeful. Having someone from outside to help you with this is a powerful tool.
If I can help, get in touch.