Back in May 2023, I wrote a piece about exploring options and alternatives to closure for organisations, drawing on examples of work we’ve done at Sonnet for the likes of TechNation and others. In the past few weeks it has been striking to see the closure of Children England and then, earlier this month, the apparently very sudden closure of House of St Barnabas.
A sector under threat
Sonnet has seen a number of organisations coming under threat as a consequence of either or both the Covid-19 pandemic and the challenging environment of Local Government funding (given the number of Local Authorities that appear to be at risk of effective bankruptcy). We’ve seen some charities seeking to draw in new and more diverse income streams to fill the gap, either to continue the extra services that deliver genuine impact for their beneficiaries, or to top-up the public sector funding that falls short of the cost of delivering statutory services. Kathy Evans’ analysis of the situation makes for challenging reading, and her comparison of the position in 2024 at the closure of Children England against that of 1942 at its founding is striking.
It may seem somewhat beyond the scope of an article about alternatives to closing charities, but I can’t help but feel that Kathy’s reference to the 1942 context of the Beveridge Report brings up strong associations with what we’d now call ‘needs-based planning’. It is striking that a wartime coalition Government managed to see the need for and undertake a comprehensive review of the support that society would need after the war and to plan major changes… subsequently implemented to give us the Welfare State and NHS (and Children England), amongst others. Perhaps it’s not such a strange analogy though: faced with existential threat and a period of crisis, time was taken and resource directed to review needs, to think, to assess options and to plan. That feels like a good recommendation for any charity or organisation seeking to decide upon its future.
Re-imagining, continuation and closure
We’ve seen good examples of organisations reviewing re-focusing their activities. This may involve reviewing and reflecting on the reasons for delivering activity balancing its financial performance with the needs it meets and impact it achieves. It is sometime possible to re-imagine and continue activity, or to identify what to close and what to continue.
This type of review doesn’t just have to take place at times of crisis. Several years ago, a client sold its trading activities in order to realise a fund that would enable it to continue charitable activity in new ways: and it continues to have influence in its chosen field to this day as a result.
For some, a change in funding streams is the catalyst to start a process of re-imagining and planning. It might prompt you to consider whether there are options to continue in a reduced form, to close or to seek to transfer activities to another organisation that is better placed to do so. We saw that last year in advising TechNation on the options in response to changes in its public funding, and the eventual transfer of activity to Founders Forum.
Sometimes, we’ve seen charities assuming a threat (actual or perceived) to their solvency means they need to close the charity as a whole. In some case, particularly where the charity has valuable property assets, it is possible to cease activity, sell property and clear any liabilities leaving a fund as a basis to plan for a new future and different ways of working.
With public funding coming under increasing pressure over the past decade-or-so, it is unsurprising to see charities seeking more diverse ways to generate income, including from trading activity. In turn, it is unsurprising that some business models face fundamental challenges and have needed to implement change in response to the aftermath of Covid-19. That may mean some sources of income have become harder to deliver or trading profits have fallen, and you may wish to consider options to invest to re-design these models or, perhaps, to sell or close in order to plan to focus on other options to raise funds.
Working with what we’ve got
Tempting as it may be to expend energy to call for politicians to agree to fund all of the interventions and activities we’d like to see and to deliver effective support to the many who need it, I fear it is more pragmatic to work with what we’ve got. I’d like to propose some actions that charities who rely on trading for profits to invest in charitable delivery can take to keep things in healthy balance:
Consider:
- Would the collapse of part or all of your trading activity automatically lead to the demise of charitable activity? What safeguards are in place to shield the charity from that risk?
- If you’re combining trading activity with impact (e.g. the operation of a business creates valuable outcomes for your beneficiaries), is the business model still as relevant as it was before the pandemic? Might a re-imagined version of activity be a better fit with current stakeholder needs?
- If you’re contemplating closure of your charity, are there activities that are financially viable that could be preserved, if transferred to another organisation?
Take a step back and ask some key questions
Change can be complex, uncertain and fraught with anxiety. Often, this is because of the lack of accessible support, sound advice, practical knowledge and tactical guidance needed to create a positive experience of this process.
If this sounds like you or your organisation, read my earlier blog in this series. It takes a step back and asks some key questions which will enable you to start the journey to achieving good outcomes during these kinds of transitions.
Do let us know your answers. It is always sad to hear that any charity with a history of helping so many people has closed: it is better to think that its activities and legacy may live on in other hands so that people can continue to benefit from that work. It’s good to hear that some of Children England’s legacy and activities can continue in the hands of the charities it has represented for so long.
