Helping you prosper

One plus one equals three

But the sentiment of two become one is something that many charities will need to give some serious consideration to in the coming months and years. My last blog was about asking for more, and encouraging charities to ask for help and consider ways that new sources of income might be generated.

But what can be done if requests for more funding have been unsuccessful?

Competition for funding will inevitably be very strong as we unwind the impact of Covid-19 – many previous supporters may simply have nothing left and be unable to support; small local businesses that always held a coffee morning every few months may go out of business, the annual dinner almost certainly won’t happen next year and if it does, attendees may simply have less spare money to bid on the signed football shirt?

Other factors are very likely to change too. Charities which previously operated from large and expensive city centre premises may find that their operations have now shrunk to minimal levels as a result of funding disappearing; can they still pay for the (perhaps now redundant) office space and deliver their output? Where do they go from here with reduced income and high overheads which they are committed to for several years?

One strategic option is to think about working with another charity. This might seem a little alien to some charities but this is where synergy really needs to be considered. Do you have a full appreciation of all the charities that provide a similar charitable aim to you? No doubt they are feeling the pinch right now too and they may welcome the opportunity to form a strategic alliance and perhaps deliver a project jointly. Doing so may solve the problem of local charities competing for the same funding and support or perhaps allow two charities to deliver the same level of output for less cost by sharing resources and gaining efficiency in the process.

If the situation is really dire however, the trustees may need to make a difficult decision and look to formally merge with another charity or consider that they are no longer able to provide their charitable aims any more without running down reserves built up by good governance over many years. Perhaps the best option here is to consider passing the reserves over to another charity with similar aims which might be able to make better use of the reserves and then formally wind the charity up.

These possibilities might seem drastic, but sentiment perhaps needs to be set aside and the consideration of maximising the delivery of charitable aims brought to the centre. After all, there is good guidance on this topic on the Charity Commission’s website: https://www.gov.uk/guidance/how-to-merge-charities which would certainly suggest that these actions would not be seen as being unacceptable actions and are actions which arguably should be being given a high level of consideration by trustees facing an uncertain future.

Battling through the dark days that may be upon us might be one way of surviving, but wouldn’t it be easier to make one plus one equal three?

For more information or if you have any questions, please contact Dave Allum or your usual UHY adviser.