The personal impact of your organisation being in financial difficulty should be split into 2 areas – emotional and financial. The emotional aspect can be the most difficult aspect to deal with and understand.
A trustee may feel a range of emotions when their organisation is in financial difficulty including:
- A sense of personal failure
- Anguish and deep worry about the fate of employees and users of their organisation’s facilities or services
- Fear of embarrassment in the local community
- Desire to do whatever it takes, even at personal cost, to rectify the position
Where people offer their time often for free or a reduced salary because of their strong feelings and belief for the purposes of their organisation, there is nearly always a strong personal attachment. Some have described their emotional journey to be similar to grieving. Seeking the support of friends, families and fellow trustees at a time when financial difficulties arise is normally a very helpful way of handling the situation.
Trustees/committee members/directors tend to worry more about the impact on members of staff and users of their organisation’s facilities or services than the financial risks they may face.
Fortunately most organisations will be structured in a way where the liability of trustees is limited making the personal financial impact much smaller or potentially non-existent. Unless a trustee has given a personal guarantee or is guilty of breaching their duties then there is no personal financial liability on the organisation entering a formal insolvency procedure.
Where the organisation is unincorporated the personal financial consequences can be significant and your own personal wealth can be completely at risk. Managing or stopping the exposure you currently face becomes of paramount importance. One of the most obvious ways to do this is to cease trading immediately. But in some instances closing may lead to greater exposure than carrying on. This is where expert guidance and advice is needed to minimise your personal liability or manage the exposure you already face.
Whether you are affected emotionally and/or financially the process of coming to terms with your organisation being in financial difficulty should not be underestimated. Lucas Ross are used to witnessing this and helping people deal with the personal impact of such situations. Call us today to allow us to start helping you to resolve your situation.