Charities - A Briefing For Charitable Organisations, September 2009



The Charity Commission's publication on surviving

the recession focuses on strategy, financial health, governance and

making the best use of resources.

The Charity Commission has issued its Big Board Talk in

response to the economic downturn. This report is a useful

checklist of what trustees and senior management should be

discussing in order to equip their charities for survival in the

current recession.

A lot of the suggestions seem like common sense, and some of you

may feel that you have already dealt with all of the questions

raised. But how many of us never have time to get round to

housekeeping and strategic planning? All too often we find

ourselves firefighting when things go wrong; just the day-to-day

running of the charity takes up so much time that planning for the

future health of the organisation takes a back seat.

The commission urges all trustees to sit down and talk about the

impact of the downturn on four main areas:


financial health


making the best use of resources.

  1. Strategy

    The recession brings both opportunities and risks. All trustees

    need to ensure that the impact of the recession is understood and

    that their charity is in the best possible position it could be to

    deal with the downturn.

    The risks are obvious and some will need to be tackled urgently.

    How certain is your future funding? Are you reliant on an income

    stream that is reducing or disappearing altogether? Is income from

    your investments reducing, and if so, will this cause problems? Are

    there other ways that income can be maximised, for example by

    letting unused space in your property? Does increasing unemployment

    and poverty increase the demand for your services and can you cope

    with this increase?

    There are opportunities as well. For instance, there is a

    growing pool of potential volunteers as unemployment and part-time

    working increases. Some of these people could have the skills you

    need. The downturn provides an opportunity to re-focus operations

    and ensure they still match your charity's objects. If there

    has been some object drift, what do you want to do about it?

  2. Financial Health

    Charities and companies have, on the whole, benefited from a

    strong UK economy in recent years. In some cases, –

    perhaps more so in the corporate world – this has led to

    complacency. Expenditure hasn't been as tightly controlled as

    it should have and continuity of income has been taken for


    Most organisations are now looking at expenditure to see where

    cost savings can be made. This might be through staff costs with a

    redundancy programme, or something less severe like reviewing your

    internet service provider, your professional advisers and your

    banking arrangements. Accommodation costs are falling in line with

    the downturn in the property market so this might be the right time

    to move to cheaper premises or negotiate a lease with your

    landlord. If your charity has been considering a purchase of

    property, and if you are in a financial position to do so, now may

    be a good time to buy.

    Are you aware of all your organisation's contractual

    obligations? Can you continue to meet these obligations, or do you

    need to review and renegotiate?

    This might be the time to use some of the charity's

    reserves. All charities should have a reserves policy and most

    choose to have free reserves equal to, say, six months' or one

    year's expenditure, so that if income was to reduce the charity

    could continue to operate. If you do not have a reserves policy,

    now is the time to develop and put in place a policy that works for

    you. If there is already a policy in place, trustees should

    consider whether to use these reserves now, either for operational

    spending or to implement a restructuring plan to secure the

    charity's future.

  3. Governance

    Trustees have ultimate responsibility for directing the affairs

    of their charity. This requires them to ensure that it is solvent

    and well-run, and delivers its charitable objects for the benefit

    of the public. Working through the commission's Big Board

    Talk checklist will demonstrate that trustees are taking

    appropriate action in the current economic climate.

    The trustee body has a great responsibility and it is clearly

    useful to have a broad mix of skills on board. Consider whether

    your current trustee body has the right knowledge and experience to

    guide the charity through the economic downturn.

    Trustees should evaluate whether the charity has adequate

    controls in place to prevent and detect fraud within the

    organisation. In a recession there is...

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