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:
- Notify key stakeholders (funders, suppliers, operational partners)
- Manage staff redundancy
- Plan future of client records
- Terminate leases and service contracts
- Finalise project accounts and monitoring returns
The issue of beneficiary records is often forgotten. Your funder may have a view on this. If the service is being transferred to another provider, then the solution is probably to transfer client records, but you need to consider the data protection issues. You may need to write to all clients seeking their consent.
If the service is not being transferred, you first thought may be to destroy client records. However, this would mean that you have no records to refer to in the event of a negligence claim being brought against you. (Adult negligence claims are subject to a three-year time limit, but children may claim at any time up to their 21st birthday.) Consider safe storage of records.
When winding up an entire organisation, you will also need to:
- Settle debts and distribute assets in accordance with the dissolution or asset lock clause in your governing document
- Administer a formal dissolution process
Assuming you are solvent, these final processes are relatively straightforward. If you are not, you will need to appoint an Insolvency Practitioner.
In the case of a company, you would need to go through a formal process:
In the case of a charity, you would also need to inform the Charity Commission.
The equivalent for a registered society would be an instrument of dissolution.
For more detailed guidance see:
- Guidance on voluntary liquidation (Companies House)
- Guidance on striking off (Companies House)
- Close a charity (Charity Commission)
- Instrument of dissolution (FCA)
- Thomson Snell & Passmore Expert Guidance for charity chairs: staff restructuring and redundancies
- NCVO guide on closing your charity or voluntary organisation – The key steps you need to take and the processes you should be aware of to close your organisation