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Achieving impact in a challenging financial context

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How can we stay ambitious when our funding isn’t? What new avenues for impact might open up? How do we build a culture where financial conversations are honest, early and empowering? Trustees are uniquely positioned to lead through uncertainty by proactively asking these hard questions.

In today’s financial climate, many charities are being asked to do more with less. Rising costs, short-term funding cycles, and growing demand for services are pushing trustees into complex decisions. But a challenging financial context does not mean that you cannot deliver impact. Even in times of constraint, it’s possible and necessary to keep impact at the forefront, exploring fresh models and innovative approaches to achieve your mission.

NPC’s fourth and final event within our trusteeship event series with the Clothworkers’ Company focused on answering some of these challenging questions. We were joined by Grant Taylor and Julie Nerney, former Getting on Board co-chairs, Suhan Rajkumar, Partner at Bates Wells and Alice Casey, Director of Programmes at Maudsley Charity, to share their experiences on the topic. 

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Trusteeship and governance

Trustees must foster a culture where financial conversations are normalised, even in good times... It is important to note that financial literacy is a shared responsibility and should not just fall to a treasurer or a trustee with a finance background.

Here are some of my key takeaways from the event:

Financial leadership starts with culture and clarity

Trustees must foster a culture where financial conversations are normalised, even in good times. This includes asking “simple” questions, using visuals to demystify finance, and ensuring everyone feels safe to contribute. It is important to note that financial literacy is a shared responsibility and should not just fall to a treasurer or a trustee with a finance background.

Two of the main duties of trustees are the responsible management of charity resources and acting with reasonable care and skill. Trustees with particular skill sets may be held accountable based on their training and how they contribute to the charity. However, having sound financial health is a collective responsibility for the trustees, who should liaise closely with finance staff.

Hence, boards should invest in training and mentoring to raise collective understanding, especially around cash flow, restricted funds, and insolvency triggers.

Being clear on your finances will also be appealing to funders who want to see a clear narrative around organisational finances and how this links to plans for impact

Strategic options require early, honest conversations

Trustees should proactively explore a spectrum of options when things are not going according to plan: cost-cutting, restructuring, partnerships, mergers, spinouts, or even closure.

Postponing difficult discussions reduces available options, whereas proactive planning enables boards to shape outcomes, be it through partnership, restructuring or dissolution. Promptly addressing challenges maintains organisational impact and demonstrates effective leadership to funders and stakeholders.

When it comes to merging and restructuring specifically, you should consider how your impact goals align with other organisations with whom you are thinking of merging.

It is important for cultural and legal reasons. Your merger should help you achieve your charitable objective.

At NPC, we believe that charities should be regularly considering mergers as a possibility for increasing impact, even when the financial context is good.

Grant and Julie shared their story of Getting on Board’s closure to illustrate the importance of scenario planning, cash flow forecasting, and legacy stewardship. They made the difficult decision to close after cash flow forecasting revealed it could not meet its going concern obligations, despite efforts to secure emergency funding. The trustees acted swiftly to wind down operations responsibly, preserving the charity’s legacy by transferring key resources to partner organisations and ensuring continued access to its content. In their experience, acting early expanded the organisation’s options; delaying would have narrowed them.

Grant underscored the importance of thinking long-term. For example, even if they have received emergency funding to stay afloat in the short term, the reality is that they would not be able to develop a sustainable income stream later. His advice? “Balance short-term views with long-term thinking, with a sprinkle of reality.”

Human-centred governance is crucial

Trustees must balance financial oversight with care for people: staff, volunteers and themselves. Emotional resilience, well-being and honest communication are essential. As Alice noted, if you have an unwell staff team, you will have more trouble.

It’s also essential to acknowledge that some strategic options mentioned above – such as restructuring, partnership negotiations, or winding down place additional demands on trustees who are volunteers already balancing other commitments. As the board navigates these complex processes, supporting one another, being realistic about capacity, and creating space for reflection will help sustain good governance through testing times.

Watch the full recording of the event on our YouTube channel.