Charities need to be aware of what stage in their life-cycle they are in, in order to prevent insolvency, according to two governance specialists.
Matthew Simkins, a charity turnaround specialist and director at Crondall Consulting, and Steve Billot, head of the business review team at RSM Tenon, advise that charities go through a five-stage life-cycle from 'birth' to 'renewal' and warn that: "Stresses can arise at every stage of an organisation’s life-cycle and therefore a ‘decline to failure’ can be observed at any one of these stages.
"The five stages often become blurred, and it is not uncommon to find an organisation with a well-established cause; and with some very experienced staff still running on adrenaline; but with few organised systems," they said.
"That is why it is so important for trustees in all charities to be aware of the stage of the life-cycle that their charity is in, so that they can understand the stresses it faces and the decisions they need to make."
The warning comes in the first of an exclusive three-part series of articles on the life-cycle of a charity, appearing in July's Charity Finance magazine. "Charity life-cycles: Combating compacency" offers pointers on what to keep track of throughout the five stages of life and what weaknesses may arise at each stage, leading to insolvency.
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