Trustees warned not to bury heads in sand over money issues

27 Sep 2016 Governance

Paula Sussex, chief executive of the Charity Commission, has warned trustees against sticking their heads in the sand when faced with financial difficulties.

Her comments came as the commission published two reports on 21 September, warning that charities that take early steps to identify and deal with financial difficulties will manage those difficulties better than those that do not.

One report documents a group case report of the regulator’s work with ten charities that had shown signs of financial distress. The second is a group monitoring review of the accounts of 94 charities where auditors had flagged concerns.

Both documents conclude that early steps to address financial difficulties and confront them pragmatically minimise the risk to beneficiaries.

They also found that charities have a range of options to help them achieve their aims in spite of financial difficulty, such as mergers and collaborations.

‘The economic reality for charities across the UK is a challenging one. But trustees will better serve those they need to support by exploring mergers and collaborations, diversifying income streams or taking other steps to manage those difficulties at an early stage,

'A head-in-the-sand approach raises concerns about the ability of trustees to run their charities effectively. Charities should not take unmanaged risks, but the risk of doing nothing is only too real and the consequences can be devastating, particularly where vulnerable beneficiaries are involved.'


Advice and support available

If your organisation is facing financial difficulties and you need to confront the issue, contact Chris Wykes Driver to find out about her next Finance and governance surgery email


Image: Flickr, Sander van der Wel