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EnglishArabicBengaliBosnianBulgarianCatalanChinese (Simplified)Chinese (Traditional)CroatianCzechDanishDutchEstonianFilipinoFinnishFrenchGermanGreekHindiHungarianIgboItalianJapaneseKoreanKurdish (Kurmanji)LatvianLithuanianLuxembourgishMacedonianMalayMalteseNepaliNorwegianPersianPolishPortuguesePunjabiRomanianRussianSerbianSlovakSlovenianSomaliSpanishSudaneseSwahiliSwedishThaiTurkishUkrainianUrduVietnameseWelshYorubaThe 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.
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).
Consider your fundraising strategy
You may want to focus on specific types of funding – or strike a balance:
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.
Some groups (even if they are registered charities or charitable trusts) are known as unincorporated associations, that is, in law they are not recognised as a legal entity or organisation, but as a collection of individuals. This is important, because it means that trustees can be held personally liable for the debts of the charity. If there is not enough money to pay creditors, trustees may have to pay the debts themselves.
Trustees in an incorporated body are not normally liable for debts incurred or negligence, because the organisation is a legal entity in its own right. In the event of a problem, the organisation would be pursued, rather than individual trustees.
This refers to members of your governing body (Management Committee, Board of Trustees, Executive Committee, Board of Directors etc.)
There are some liabilities that all committee members face, whether in an incorporated or unincorporated organisation:
Scenario 1
You have lost funding for some of your work, but this work is not a major contributor to funding your overhead costs, so your main concern is the loss of the activity rather than the threat to the overall sustainability of your organisation.
Consider:
Manchester Community Central Factsheets
A resource for the Voluntary Community and Social Enterprise (VCSE) Sector in Manchester
Updated August 2022
Introduction
There are at least three circumstances in which organisations may still find themselves in crisis:
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