Charities – surviving tough times
Far from being immune, these troubled times are giving rise to significant issues for charities. We highlight just a few areas below.
Charitable assets - Charities are grappling with how and where to hold charitable assets, to balance obtaining best returns whilst ensuring a safe portfolio. This was brought into sharp relief by the number of charities who had assets frozen in Icelandic accounts. Charity trustees are under specific legal duties to ensure that any investment of surplus funds is made prudently.
Funding commitments – Charities may need to review their funding commitments if their income is severely diminished. Where a charity is planning to reduce its provision of funding, the basis upon which funds are committed needs careful consideration in order to ensure the charity’s reputation is maintained and no liability arises.
Merger and survival - Smaller charities, in particular, are noticing such a decrease in charitable receipts that they are struggling to survive. Merging with another charity with compatible aims may provide a means of survival. As with any merger, the appropriate legal procedure needs to be followed carefully, including both sides undertaking thorough due diligence to ensure each party has a full understanding of the other
Downsizing – A decision to downsize is likely to result in staff restructuring and redundancies. Great care needs to be taken to ensure the correct procedures are followed to reduce the risk of a claim for unfair dismissal and/or wrongful dismissal. Such claims can be costly and time consuming - the last thing any organisation needs.
For more information on any aspect of charity law, please contact Tom Marshall.