Restructuring in the charity and not-for-profit sector: A change of perspective?
Reputation issues
Conclusion
At critical times in any organisation’s lifecycle, it is imperative that its reputation is protected. This is especially important for charities as any damage can lead to a decline in donations or the loss of key project funders. This can be seen in the case of Oxfam which lost 7,000 regular donors when it was revealed that staff sexually exploited victims of the Haiti earthquake in 2010. This led to over 100 redundancies in its workforce reflecting the immediate loss of project income and donations. 8 The longer-term impact on bequest income should also not be underestimated as this will take a number of years to manifest.
The sector has passionate, dedicated and committed staff and is far more collaborative than its private sector counterparts, which provides a strong platform for a successful restructuring. The reluctance to undertake contingency planning and to take measures to reduce front line services when finances are or are going to deteriorate, given the strong emotional commitment to the cause, provides a competing challenge. The dual nature of control with a Trustee and Management Board when working well also provides a valuable layer of control and strategic oversight but when this relationship deteriorates, or sufficient challenge isn’t provided by the Trustees this can also complicate matters. Looking forward the use of collaboration up to and including mergers and outsourcing both as a cost reduction and an operational improvement measure are areas that Trustees should be considering more in setting the strategy for their organisation and to assist with any restructuring programme.
Reputation is especially important for charities as any damage can lead to a decline in donations or the loss of key project funders.
Restructuring Advisory
Corporate restructuring
Corporate advisory
Phil Reynolds Restructuring Advisory
Contentious insolvency
Solvent restructuring
Notes
8 Civil Society <www.civilsociety.co.uk/news/oxfam-suffered-year-s-worth-of-supporter-attrition-in-six-months-since-haiti.html>, 1 November 2019. The Guardian <www.theguardian.com/world/2018/feb/20/oxfam-boss-mark-goldring-apologises-over-abuse-of-haiti-quakevictims>, 1 November 2019.
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