Charities management of financial difficulties

The Charity Commission (‘the Commission’) has  published  reports which show that trustees who take early, pragmatic steps to actively identify and manage their financial difficulties will secure better outcomes for their charities and their beneficiaries.

A number of charities have closed in the past year, some of which have been high profile, leading to the Commission undertaking a programme of work to test the resilience of the charity sector.

The report highlights a number of key themes and wider lessons for charities. These include that:

• the case studies demonstrate that early steps to address financial difficulties and confront them pragmatically minimised the risk to beneficiaries
• charities have a number of different options to explore including the possibilities of mergers and collaborations to achieve positive outcomes despite their financial difficulties
• the future outlook for charities remains challenging; trustees must stay alert to the risks of financial distress and manage them actively

The Charity Commission  have published guidance Managing a charity’s finances: planning, managing difficulties and insolvency (CC12) and  Collaborative working and mergers: an introduction (CC34).