After 21 years supporting community development Groundwork South West has agreed to enter administration, sending its 130 employees out of work.
Groundwork South West, one of 35 legally independent charities in the Groundwork Federation, informed staff on Wednesday that the trustee board had agreed to initiate proceedings to take the charity into administration.
Groundwork's national chief executive, Sir Tony Hawkhead said: "We are obviously very sad to see a member of our federation forced to take this difficult step. We aim to work closely with administrators when they are appointed to provide whatever help we can to ensure communities int he South West continue to get the support they need."
Administrators have not yet been appointed at this stage, Graham Duxbury, development director at Groundwork UK told civilsociety.co.uk, but this is likely to take place in the next few days.
Groundwork UK works at a national level providing support to the local charities in the federation, with a primary objective of creating income for project delivery. But the problems facing Groundworks South West only came to light "quite recently", said Duxbury.
'Unresolvable cashflow difficulties'
"Groundwork UK at the centre of the federation isn't an enormous entity by any means," he said, "and it doesn't manage the businesses of the other members of the federation.
"The difficulties at Groundwork South West have come to light only quite recently. We are aware that it was on quite an ambitious strategy of growth, growing quite rapidly in order to get the critical mass that, given the operating landscape these days, charities need to be at in order to survive.
"Our understanding is that there are a number of those programmes that were growing that had a number of costs coming together at the same time which led to some unresolvable cashflow difficulties."
It's a possibility that some of Groundwork South West's projects will be reallocated to the other Groundwork charities. "It's happened before," Duxbury said. "If a project is viable we will work with the administrators to figure out what happens in terms of that project continuing."
Groundwork South West operated in an area from Bristol to Falmouth. With projects in Plymouth, Torquay and Cornwall to name a few, it worked with partners to support environmental initiatives that improve community life, including skills programmes, employment solutions, landscaping, and arts and sports projects.
Groundwork South West was a key partner in improving the employment situation in the area, successfully delivering Future Jobs Fund vacancies before the programme was discontinued and subsequently as a partner placing Work Programme users in vacancies as well.
Having been launched in 1991 by Her Majesty the Queen (under the name of Groundwork Plymouth Area Trust), the charity was celebrating its 21st anniversary this year, and launched its first charity shop in Plymouth's Derry Cross. At the launch of the shop Groundwork South West warned that "with ever-decreasing funding, Groundwork has to rely more and more on public support," calling for donations to stock the store.
Positive in last financial report
Groundwork South West's latest accounts filed with the Charity Commission show that the charity's income up to 31 March 2011 was £6.4m, increased from £2m the year before, and its expenditure was £6m. At that point the trustee board's annual risk assessment identified "only a few minor risks, other risks being either eliminated or controlled", its annual statement revealed. Its unrestricted reserves sat at £473,012, representing six months of running costs.
Feeling optimistic, the trustees foresaw opening new offices in Cornwall, Devon and Dorset and extending its services in the West of England, Swindon, North Somerset and Gloucester. The trustees also saw public sector cuts as "likely to increase opportunities for us to tender for contracted works, across a range of services eg. land maintenance, positive activities for young people and community engagement focused on delivery of the Big Society agenda".
The official staff numbers on the payroll at the time of filing its accounts stood at 405 employees.
The news of Groundwork South West entering administration comes just one month after the Groundwork Federation crept up 41 positions in the Charity 250 Index after a more than 30 per cent increase in income over the past three years.