The Charity Commission has updated its guidance to help trustees navigate through financial hardship.
Its updated guidance (CC12) is for trustees overseeing voluntary organisations that are facing financial difficulties or at risk of insolvency.
The Commission has split its guidance into three separate pieces to allow trustees to find the information that best relates to their situation.
Its guides offer advice that charities could use to identify problems in early stages, identify risk of insolvency and when to seek relevant legal help to deal with financial challenges.
The first piece of information consists of actions trustees can take to minimise the chances of getting into financial difficulty by active monitoring and reviewing their charity’s financial position.
It also provides guidance on launching fundraising appeals or changing how charities could operate.
If the first steps do not help charities’ situation, or if charities are already at risk of insolvency, the next two steps of the updated guidance focus on insolvency and explain the steps charities need to take according to their charity type.
CC12 also set out the importance of getting relevant professional advice and provides a checklist to help trustees understand if their charity may be insolvent or may be at risk of insolvency.
The commission also recently updated its decision-making guidance to increase use by trustees.
‘You can make it less stressful by being prepared’
Mazeda Alam, head of guidance and practice at the commission, wrote in a blog: “We know that managing financial difficulties is not easy and can be stressful: it is a situation that will mean making some sort of change at your charity and for some charities, it could also require you to take certain legal steps.
“You can make it less stressful by being prepared for such an eventuality.
“That is why we have refreshed our guidance about improving your charity's finances (also known as CC12). In it, we explain that it is vital that all trustees, regardless of whether they have financial expertise, have a clear picture of their charity's finances, so that they can act on any 'early warning indicators'.
“We urge all trustees, even if they are very experienced in acting as trustee, to read the guidance. It is particularly important not to treat finances as a matter for the treasurer to deal with alone.
“We know there are no easy answers in these challenging times, but we hope this refreshed guidance supports trustee boards to have focussed conversations about options for improving your charity’s finances and to help you through financial difficulties should they arise.”
Related articles
