Take early action on financial difficulties, says Charity Commission

The Charity Commission has published a set of reports as part of a wider programme to explore the financial resilience of the sector and highlight wider lessons for charities. The report launch forms the start of a campaign to communicate the wider lessons for charities.

The news release highlights the finding 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.

Other key lessons include:

  • 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.

Following the closure of a number of charities in recent months, some of which have been high profile, the Commission undertook a programme of work to test the resilience of the charity sector. A total of 94 charities with incomes of over £1 million were identified where auditors highlighted that they may be in financial difficulty.

The two reports:

The news release suggests that charities facing difficulties should check its  guidance Managing a charity’s finances: planning, managing difficulties and insolvency (CC12) and should also consider Collaborative working and mergers: an introduction (CC34).