Charities: do you know what deep sh*t looks like?
It's important to know what real crisis looks like in your organisation. There are a lot of charities in dire straits at the moment, but so often, they don’t know until it’s far too late….
I remember my worst experience. I was interim CEO. After two months, when the accounts finally made sense, there was no money and the pipeline was a fantasy. A crash in the youth sector and a move to payment by results. Board members didn't trust me yet, and were sceptical. I did some diagrams of burn rates, funding delays, contracts and cash flows on a white board. Faces fell, and scepticism turned to white hot panic. We managed a sale and merger to a much larger organisation with weeks to spare, and I exited stage left, panting.
I bust my dangly bits trying to make sure staff kept their jobs, but then six months later, the new owners closed it and nobody got paid. (I’m sure they did their best.) I saw almost first hand the difference between a good ending and a bad one.
There are a lot of parallels but also differences with now. Many charities and social purpose businesses were going under at that stage. Back then, people barely knew it was happening. I think everyone has their eyes open this time, and we’re more cynical - a good thing alongside necessary idealism and passion.
But one thing has always struck me: you need to know what 'deep sh*t' looks like. Often people don't.
Nobody is immune. Raging success stories are the most susceptible. Success has been so meteoric that failure never gets considered - or recognised when it’s there. It’s good to be ambitious, but reality wins 100% of the time. Think of some of the household names.
Meanwhile, for some organisations, life has been so tough for so long they don’t notice when a daily struggle has turned to a death spiral. If it’s happening over and over, it may be time to knock it on the head.
At a time like this, I recommend we always go for ambitious realism.
And most of all, listening to the signs.
CEOs and Boards: keep listening. Don’t tell people they’re just being negative. Ask your finance people difficult questions. Make it clear that you want the unvarnished truth.
If your income generation people are good, and also telling you things are getting more difficult, make sure you listen.
Cut costs right back as soon as you can. Trustees, you need to listen too.
Trust me, hope for the best and plan for the worst is a very very good way to run a charity in 2024.
Finally, in case people start to know me as the ‘charity grim reaper’, I would also point out to funders again that crisis funds with fast access could prevent some of this. Acceptance of some endings is not the same as just giving up.