The National Union of Students is facing a cash shortfall of nearly £3m, according to a report to the board seen by Civil Society.
Civil Society News also understands that the charity paid tens of thousands of pounds in lieu of notice and ex gratia payments to its departing chief executive, Simon Blake, earlier this year.
NUS had initially expected to make a surplus of £1m this year, on a turnover of more than £20m, but a report for the board, seen by this publication, warns there will be a cash shortfall of £2.9m by June 2019.
The report says that NUS either needs to dispose of some assets or borrow more money.
“We understand these are being considered as part of the ‘reform’ workstream of the turnaround board,” it said.
The report added: “Any options which involve borrowing will need to be underpinned by a robust turnaround plan which shows that such borrowing can be repaid.”
It also reveals that there has been up to £800,000 set aside for redundancy payments.
In a statement, NUS said it is “taking measures to address a number of governance-related challenges”.
The NUS Group is made up of seven different entities: the overall group, a holding company that owns the property, a charitable arm for England and Wales, a charitable arm for Scotland and three subsidiary companies.
The report to the board recommends that “tax advice should be sought before undertaking a streamlining of the group structure”.
NUS has fixed and long-term assets of around £20m. This includes property worth £7m and shares worth £13m.
According to accounts filed with Companies House, NUS had a total turnover of £24m in the year to 30 June 2017 but reported a deficit of £3.6m.
Departing chief executive received pay-off
Civil Society News understands that Blake was paid in the region of £80,000 when he left the organisation, to cover payment in lieu of notice, ex gratia payments and holiday entitlement.
When approached by Civil Society News about his departure Blake said: “I resigned from NUS to take up the role as CEO at MHFA England.”
In August it was announced that Blake was to leave NUS to join Mental Health First Aid, a social enterprise, as chief executive in October.
Blake had joined NUS in 2015 from young people’s health charity Brook.
When his departure was announced. NUS president Shakira Martin said Blake "is a passionate and determined leader who has made a really positive impact at NUS and I know he will do great things at MHFA England”.
A former NUS trustee expressed concern about the current situation, which he described as "ludicrous". He also questioned whether the payment to Blake was appropriate.
“There are serious questions to answer about the management of NUS over the last few years," he said. "Students’ unions will be reassured that the financial predicament is now being faced up to, but there remain difficulties ahead,” he added.
NUS did not comment on the settlement agreed with Blake, but did confirm that he left in August.
In a statement, NUS said it was committed to sorting out governance and finance issues.
“We can confirm that NUS is taking measures to address a number of governance-related challenges,” it said.
“The boards, officers and executive team are agreed that we need to deliver fundamental corporate, democratic, and financial reform by summer 2019. Our members – students’ unions across the UK – have been briefed on the position and are involved in shaping this reform along with their officers, students, and other sector stakeholders.
“Any final proposals will be taken to National Conference 2019 to be voted on by our members.”
Search for a new chief executive ‘paused’
NUS also said it has placed the search for a new chief executive on hold.
“The recruitment of a new CEO was paused in October. Peter Robertson has been appointed as acting CEO until summer 2019.”