My Charity is on the Brink of Closing: What can I do?

Charity Closing Down

It may feel as though closing your charity is the only option, especially if you do not have an extensive list of donors or you have a lack of disposable income preventing you from achieving your charity’s aims and objectives. In these situations, growing or indeed surviving can be difficult. However, before you take the plunge and close for good, here are a few options you should consider, including:

  • Seeking finance: Your charity may simply need an injection of cash to get it to the next level. For charities, grants are one of the best ways you can inject money into your business at little or no cost to you. You can find out more about grants here.
  • Information sharing: Do not be afraid to approach similar sized charities to share ideas and get advice. Your best bet is to find a charity that operates in a different location to you, but has similar aims or objectives to your charity. This way you are not direct competitors, but you may both mutually benefit from sharing ideas.
  • Joint activity: Some charities may be willing to work with you if they can also gain from the experience too. Collaborative work can be a great way to reach out to more people, increase awareness and also carry out more tasks without the added administrative burden. An example of this could be by holding a charity event, such as a fundraiser. In this way, both parties are attracting a wider pool of potential donors and have a larger spend to reach more people.
  • Joint venture: This works similarly to joint charity activities, however, a contractual agreement is made for a specified period of time where both charities will split assets, revenue and equity respectively. This is great for charities that are trying to get exposure quickly, raise finance rapidly or are looking to run a large project over a period of time and need another name to help push their idea.

Merge?

If you have exhausted all options, a merger can be a great way to save your charity. For many, mergers can seem as though you are handing over your charity or organisation to someone else; however, this is not always the case.
Mergers give you the access to resources, contacts and finance that you may not have originally been exposed to before and the ability to save your charity from potentially closing.  What is more, the charity does not necessarily have to operate in the same space as you. It is important to understand that mergers take various forms:

  • Takeover – Both charities will operate under one brand. This generally tends to be the charity with the most assets and largest revenue.
  • New charity – A completely new charity will be formed, with all assets and resources shared equally.
  • Isolated – Both charities work as completely separate entities, however assets, resources and finances will be shared and any revenue made will be allocated respectively.

Before considering a merger with another charity, there are several things that need to be well thought out. Although it may save your charity from closing, a merger may not always be feasible due to finance, legal and cultural restraints.
Furthermore, depending on the nature or set up of your charity, a merger may not be practicable. This is due to the structure of both charities or the terms and conditions that may be stated in the Governing document. Charities such as CIOs and subsidiaries of companies will have to follow different procedures and in some cases, may not be able to form a merger with an entirely separate charity.

Therefore, it is advised that charities seek professional advice, carry out meetings with their current trustees, board members and accountant. This will help determine whether a merger is in the best interest of the charity. The Charity Commission has a range of tools and resources that can guide you on the process of merging too.

If you would like to find out more click here  or email Suda Ratnam, at suda@raffingers.co.uk, who will be able to provide you with further information.