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Manchester Community Central

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Risk Assessment

It is good practice to carry out regular comprehensive assessments of all the risks faced by your organisation and to maintain a register of them. Many of these risks will be operational: delays or shortfalls in trading income, accidents, staff absences, mishandling of money, client abuse etc. Some risks will be strategic, in that they carry a threat to the long-term effectiveness or viability of the organisation.

Closure

Unless it is due to success and achieving all your aims, no-one wants to have to close down their organisation. Sadly, it may not be possible to keep going and closure is the only option. If so, it is important to do it right. This guidance will help you to do it responsibly and safely. When winding up a project or service, you may need to:

Insolvency

Insolvency is something to be addressed as a matter of urgency because:

  • If you continue to trade when insolvent, there may be significant Committee member liability, even in an incorporated organisation; and
  • Closing down an insolvent organisation is much more arduous and costly than closing down a solvent one

There are two basic tests for insolvency:

Merger

If comprehensive funding cuts have taken away all your funding for activities, then it is unlikely that you will find a willing merger partner.

However, it may be that partial funding cuts have merely left you struggling to sustain your organisational infrastructure (management, administration, governance, premises etc). In such a situation, merger with one or more other agencies may be a significant option.

Structurally a merger may mean:

Collaboration

Most voluntary organisations will have experience of partnership working at a basic level: networking, information-sharing and referral, joint events; perhaps also through involvement in joint strategies or delivery plans or through co-location of front-line staff.

Some voluntary organisations may have gone a further step by engaging in:

Cost Reduction and Restructuring

The painless response to a funding crisis is, of course, to find alternative sources of income, but this may not always be possible in the time that you are able to buy with your financial reserves. In reality, you may well find that you need to reduce costs, because this will be within your control and it will have a fairly swift impact.

Strategic Review

Loss of funding may require a different approach: either different goals or a different way of doing business.

As an organisation set up for public or community benefit you will need to stay within the boundaries of the objects set out in your governing document; you would otherwise need formal approval (Charity Commission, CIC regulator).

Fundraising

Consider your fundraising strategy

  • Are you opportunistic, needs-led or strategy-led?
  • What about ethical principles and no-go areas?
  • Do you have a view on targeting different types of funding?
  • Do you have a view on targeting different sources of funding?

You may want to focus on specific types of funding – or strike a balance:

Challenging a Decision

For many local voluntary- and community-sector organisations, the funding crisis arises from cuts in local public-sector funding prompted by the financial settlement with central government. Groups will therefore need to make a tactical judgement as to the likelihood of changing funding decisions by local authorities and PCTs in the current climate.

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