England's charity sector regulator has published updated guidance about financial difficulties to support trustees in their decision making.
The Charity Commission has refreshed its CC12 guidance on improving your charity's finances. The legal requirements remain the same, which the guidance continues to cover, but the guidance is now in three parts.
The first of these sections is about improving your charity’s finances and is for all charities. It focuses on preventative actions that trustees can take to minimise the chances of getting into difficulty, such as active monitoring and review of their charity’s financial position.
Early identification of problems gives charities the best chance of recovery, by widening the range of options available to improve the situation. The guidance lists some of these steps, such as launching a fundraising appeal or changing how your charity operates.
Where these steps do not remedy the situation, or the charity is already at risk of insolvency, the next two sections within CC12 focus on insolvency and explain the legal steps trustees need to take.
The options that are available to charities vary depending on their structure, which is why there is now separate guidance for trustees of unincorporated associations and trusts and for trustees of charitable companies and Charitable Incorporated Organisations (CIOs).
CFG encourages trustees and charity finance professionals to familiarise themselves with the advice.
Dr Clare Mills, Deputy CEO of CFG, comments:
"We were delighted to be asked to support the Charity Commission with this important update to CC12. We encourage all charity leaders to read the refreshed guidance and familiarise themselves with the new sections and the options they contain.
"The charity sector is under significant pressure currently. Donations are decreasing whilst demand for services is rising, as are the costs of running an organisation. Protecting your charity's future is paramount if it is to continue serving your communities. The responsibility must be shared by all charity leaders, not only the Treasurer. We commend this new guidance to you."