Charity Sector Struggling

Steve ElliottPosted 5 April 2016 By Steve Elliott, Business Recovery and Insolvency Partner In Business Recovery & Insolvency Charity

A Guardian survey of more than 1,000 charity professionals in 2013 found that one in ten did not expect their charity to exist in 5 years. This stark prediction was made in spite of the belief that 85% expected demand for their services to increase. Little did they know how much sooner that prediction would become reality!

The charitable sector has been losing funding from Local Authorities in dramatic fashion, despite being asked to take up the slack where services have been cut. We heard the Chief Executive of a substantial County Council say recently at a breakfast meeting when questioned about funding cuts in the charitable sector, that charities could and should no longer rely on Local Authority funding but say in another breath that the gap in services should be filled by well-meaning local people!

Why do we care about this as insolvency practitioners? Apart from our personal views, we have seen some major charity failures in the UK recently, Kids Company is a prime example and last week a Midlands credit union collapsed and is unable to repay members deposits. We (sadly) expect to see that situation replicated locally and we have seen how ill equipped the trustees and volunteers of these small charities/social clubs/sports clubs are to deal with impending insolvency and all of the consequences that flow from that.

Some trustees are even unaware of potential personal liability. Early advice can mitigate damage and avoid “pitfalls for the unwary”.

To discuss this or anything else contact Steve Elliott on 01793 818300 or send him an email.

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