The Charity Commission has issued guidance for trustees about managing cost-of-living related financial difficulties in charities.
The guidance states that the Charity Commission recognises many charities are facing difficult circumstances resulting from rapidly increasing costs.
‘This may include their own cashflow but also concern for those they serve and for their own staff facing cost of living pressures. Some charities are also experiencing increased demand, particularly charities providing services to people in need. Donors may also be feeling financial constraints, leading to reduced income for some charities.
These financial challenges can have a major effect on charities and those who depend on them. This guidance is for trustees, especially trustees of smaller charities, who may need help when facing difficult decisions about their charity’s financial position. It does not directly address wider issues that those in the charity may face, such as staff hardships, but guidance is available for trustees from other organisations to support with this.’
The guidance covers the following areas:
- Trustees’ duties and decision-making
- What to do if you experience financial difficulties
- What to do if your charity cannot continue to operate
- Reporting a serious incident to the Charity Commission
In these challenging circumstances, the Commission reminds trustees that it is important they continue to understand and comply with their duties to provide effective financial stewardship, and to ensure that any decisions are in the best interests of the charity and legally sound.
Trustees should always act in their charity’s best interests, take into account the risks of their decisions, and evaluate their charity’s financial position.
The guidance goes on to consider what actions trustees should take when their charity is experiencing financial difficulties and how to develop options to support continuing operation and delivery.
Finally, the guidance covers what to do if the charity can no longer operate and how to report a serious incident to the Commission.
Read the full guidance: Manage financial difficulties in your charity arising from cost of living pressures
You may also be interested in reading this blog on Managing finances through challenging times.