Managing a charity in a crisis

Published by Sarah Ediss on 10 November 2020

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COVID-19 is still impacting our daily lives with another national lockdown having commenced on 5 November. In order to ensure your organisation is able to not only survive the next six months but also continues to deliver it’s not for profit objectives, it is important that the Trustees and Executive Team have crisis management at the top of their agenda. This article looks at some key points to consider when managing a charity in a crisis.

Be a strong leader

One of the most important elements to help the organisation cope with a crisis is resilient leadership. The messages need to be strong and the leaders must be visible.

This is particularly difficult at a time when we are all being encouraged to socially distance. However, we must all embrace technology. Virtual meetings and communications make it possible for leaders to remain close to the team even if they are not in the same building.

Leaders will also need to be flexible. Just because the organisation has always done something in a particular way doesn’t mean that it needs to continue in this way. It may be that the charity adapts in the short term to new ways of delivering their service and reverts back after the pandemic has passed but it may be that this is an excellent opportunity to future proof the organisation.

It is likely that teams will be under considerable stress. Dealing with their wellbeing to ensure they are still performing at their best will be an important part of a leader’s role.

Face the operational challenges

Some charities may be in a position where they are a lifeline to some of their users. During this crisis it is vital that those beneficiaries are identified and protected.

Charities will need to ensure that their limited resources are re-focused to ensure the critical services are continued. It is better to do a few things well than spread the risk across too many projects.

It is also important to ensure that throughout, health and safety and safeguarding standards are maintained. There must be no compromise in these areas.

If the organisation makes the decision that it can no longer continue, even with its vital services, it is important to ensure the beneficiaries are provided with a path to access alternative help. Is the charity able to put its beneficiaries in contact with another not for profit organisation who will be able to help them?

Manage your finances

Ultimately how the organisation will be able to cope with its operational challenges will depend on the strength of its finances. It is crucial to have access to up to date and accurate financial information. A charity cannot afford for their accounting records to be a source of weakness.

To decide on a strategy to deal with the crisis, the charity will need to revisit their financial forecasts to include revised income projections and expected revised cost base. If these are prepared with sufficient detail, key variables can be changed to stress test these forecasts.

Any revised forecasts will include a baseline expenditure below which the governance of the charity and the ability to comply with safeguarding and health and safety could be at risk.

Scenario planning

Scenario planning can be used to help assess the uncertainties in a charity’s external environment. It involves making assumptions about what the future is going to bring and how the operating environment will change over time.

It can help stimulate new thinking and explore uncertainties.  Perhaps consider preparing a best case, medium case, and worst case scenario.

Each charity should think carefully about what the worst case scenario could look like and calculate a wind- down reserves calculation – this is the minimum amount of money the charity needs in order to be able to pay all its liabilities and wind down without needing an insolvency process. Once calculated it is then useful to have a timeline working backwards to enable the organisation to have a smooth runway to closure. This exercise will allow the charity to understand the lead time for taking advice, make key decisions and implement a closure plan.

Don’t forget to communicate

Communication is key. Once the organisation has chosen a strategy to follow – be clear what this is to users, employees, and donors.

It is expected that Trustees will need to have more frequent meetings at this time. These are likely to be virtual but do not forget that the same governance should be followed as if this was a face to face meeting. Minutes should be taken, and clear action points delegated to specific individuals. All decisions should be clearly recorded.

Seek help

If you think your organisation is facing financial difficulties, you must seek professional advice. Don’t leave it too late to ask for help.

Our purpose is to guide you to a brighter future. Kreston Reeves are here to help the charity sector navigate their way to a brighter future even during these challenging times.

If you would like to discuss the topics explored in this article, please contact Sarah Ediss.

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