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Advice on joining a struggling organisation

Charm Marcus Anonymous Posted 10 months ago

I am thinking of joining an organisation as a new Director, but the organisation has a financial history in deficit before covid. They have some partnerships, but these are not well developed. What would you consider in my position regarding this organisation?

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Peter Lyster Staff PANEL

Volunteer; Trustee; Chair of the Board at For hire 10 months ago

The key question - and quite reasonable to - is what is the charity doing to fix its long term financial security? If it isn't already addressing this issue before you join, I would probably walk away, unless you are some turnaround expert, but then you wouldn't be asking this question!

It is really important that the organisation understands the problem and acknowledges that it is possibly its highest priority to fix it. Even the most intractable challenge can be resolved, but only if the leadership accepts it is its responsibility to do so and is already in the process of fixing it.

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Mike Preston Staff PANEL

Between Roles at Between Roles 10 months ago

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I would suggest tsking a ghood look at the annual report and AGM Minutes. You might also like to consider speaking to one of the trustees to understand how trustees manage finances, and risk (If you wanted to be really check you could ask if you could observe a trustee meeting - That should give you a good understanding of how the board work with the senior management team, but also how well risk is manged, and how decisions are made)

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Jonathan Grosskopf Staff PANEL

Freelance Chartered Accountant specialising in helping charities at as above 10 months ago

Legally speaking a charity that trades whilst being insolvent, in deficit then all the trustees are individually and collectively responsible for the debts of that charity.

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Jonathan Spencer Staff PANEL

CEO at Zetetick Housing 10 months ago

There are several important factors that should be considered and disclosed before making any decisions. These include the organisation's turnover, potential depletion of reserves through deficits, size of reserves, origins of partnerships, and reasons for lack of development. Additionally, clarification is needed on the term "director," as it may refer to a non-executive position or not?

It is also important to understand the motivation behind joining the organisation and did you conduct research on Companies House or the Charity Commission, and what is your familiarity with the organisation.
Furthermore, it would be beneficial to know what specific skills you bring and the reasoning behind your interest in the organisation. This is only a partial list of the information that is necessary to make an informed decision.
Before I could give advice, I would want to know a fair bit more...

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Jimmy James Staff PANEL

Principal at Minerva Fundraising Consultancy 10 months ago

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Hi,

I would agree with Marcus and Julien.

I would also put off a final decision until after the General Election - if you can.

In the meantime, I would seek advice from the charity Pro Bono Economics. They have a wealth of expertise which will help to inform your decision-making, and their CEO Matt Whittaker is very helpful.

Good luck !

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Marcus Ward Staff PANEL

Partner at Peach Consultancy 10 months ago

Of course undertake some basic due diligence to assess the full financial picture. Similarly check the organisation's governance to ensure that decision making can actually take place, there are no major internal disputes and no legal actions pending.

However, i wouldnt red flag a struggling organisation. Many charities are struggling at the moment, and anyway major peaks and troughs are a feature of so many charities. Its part of what makes it a little more interesting/exciting. If you believe in the organisation's role and work, you can see a solvent direction of travel, and you think you can help and make a difference, then i would say go for it. If it has limited liability, all the better, because this protects you from all but the most egregious mistakes.

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Julien Haye Staff PANEL

Trustee at NCT 10 months ago

There are (at least) three key questions I would like to have answered:

Why is the organisation in this situation? Is it due to poor strategy, poor management, or other factors?
How does the organisation sustain itself despite its poor financial performance? Where does the money come from?
Isn't it too late to turn the situation around?

Additionally, I recommend assessing the maturity of the risk and governance arrangements. Based on recent experience, this aspect can have a significant impact on the three questions mentioned above.

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