Charities facing closure can still have a valuable input

If you're winding down, it's still possible to benefit other organisations and the community, says Peter Gotham of Gotham Erskine

Peter Gotham
Peter Gotham

On these pages last month, Craig Dearden-Phillips advocated a dispassionate appraisal of the financial and emotional resources of charities that are facing problems.

He gave the example of how he led the way, as a new chair, to a managed closure - with sufficient left over for a final celebration party.

Craig - a little optimistically, in my view - implied that, with energy, morale and relationships, a problematic financial position can be resolved.

The current round of cuts will be too much for some charities, even those brimming with enthusiasm - but with foresight, the activities can be transferred to other providers and the trauma for staff and beneficiaries can be reduced. Local community resources - what David Cameron calls the big society - are under enormous threat from the closure of both smaller and larger charities, but early recognition of the realities can temper the situation.

I work with several groups that are considering a managed wind-down, generally including the transfer of projects and staff to another local group. As one chair told me, "our objective is to secure the best deal for the local community". As we know, committed, skilled trustees are difficult to recruit but, in this case, some trustees might join the new body, which would be an even better result.

It takes time to have discussions with funders, with staff and with suppliers (because sometimes they too will assist) and it is so much easier if there is something the charity can offer. In Craig's example, some funds were left over for a party - but if action is taken early, funds might be available to do deals, or even for a dowry. In addition, funders might be willing to assist, whether by varying grant conditions or even agreeing not to make repayment claims.

With enough time and trust, much is possible - but such situations are also fraught with risk. Getting good professional advice early on is crucial to avoid making things worse and landing trustees with a difficult discussion with a liquidator. Hands-on advice also helps to reduce the stress level for trustees, and the right letterhead can even assist in negotiations with third parties.

It is unfortunate that the umbrella bodies that could have assisted are often themselves under great threat. This, like the handling of the Transition Fund, is more evidence that the cuts have not been well planned or well managed from on high. Let's hope the not-for-profit sector can teach the government how downsizing should be done.

Peter Gotham is a partner at Gotham Erskine

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