Rescue OR Close

Do you rescue or close down your organisation? That is a tough decision to make when you are a trustee. As much as you may know or be taught how to be a professional trustee it is rare to be able to put to one side the emotional attachment to your organisation.

No matter how difficult it might be, you have to allow your head to win and not your heart. The simplest reason for this is because in the event of Insolvency your actions will be reviewed against those that someone with no emotional attachment would have made. Straying into territory where emotional decisions are made can result in personal consequences. It is clearly important that you make decisions driven by complying with your duties.

The difference between rescuing your organisation and closing is rarely a fine line. Most organisations are usually far enough up or down the decline curve to be clearly in the rescue or close camp.

As with any organisation, each situation will be unique and it is impossible to summarise all possibilities for you to digest, however below you will find some general pointers to help you identify where your organisation might be.

Organisations that can be rescued often have characteristics such as:

  • Sufficient cashflow to continue trading for at least a few weeks and pay key suppliers of services (often employees) or goods (often stock)
  • Loyal staff
  • No imminent court action
  • There are other local organisations with similar objectives/characteristics
  • Valuable assets are available as security or can be sold
  • Dwindling membership

Organisations that need to close often have characteristics such as:

  • Daily losses are being incurred – this is often only revealed when an external adviser looks at the financial position
  • Reserves will only dwindle if operating continues
  • No guaranteed future income/donations/grants
  • Key services have been pulled (e.g. IT or specially adapted premises)
  • Court action has been commenced
  • It is discovered grants previously received are in fact repayable

If you find yourself wondering whether your organisation can be rescued or should close, contact Kevin Lucas on 0330 128 9489 to discuss your organisation’s position in more detail.