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How to close a charity

By Beth Wood 15 February 2017

When news hit last September that leading childcare charity 4Children had closed, our CEO Dan Corry argued that a charity closing is not necessarily a bad thing. We’ve said before that the sector is in dire need of some creative destruction. In the same blog, Dan said that the charity sector should learn from this type of event, particularly as, in this case, the charity managed to ‘close in a way that did minimal damage to its beneficiaries and staff’—a major coup.

We talk a lot at NPC about governance and retaining a focus on mission and beneficiaries, the importance of leadership in taking bold decisions, and the need to adapt to times of change. But this is easier said than done. How, as a trustee or CEO, do you actually make a decision like this, deal with the inevitable conflicts, manage the risks and deliver a successful merger or closure?

We recently spoke to 4Childen’s former and final CEO Imelda Redmond. She gave us an honest and reflective account of the process of deciding to close,  the process of doing so, and how they successfully transitioned the charity’s beneficiaries to new providers*. In today’s challenging environment her comments provide food for thought for many CEOs and trustees. We are publishing this interview in an effort to encourage learning and discussion around these tough governance decisions and how to successfully close a charity. NPC would also like to thank Imelda for her time and thoughtfulness in sharing her experiences more widely.

Below we highlight some of Imelda’s points that stood out to us, and you can read the full interview with Imelda Redmond here.

On valuing beneficiaries above all

‘If you’re struggling year after year just getting by you have to ask: is it right to have that level of uncertainty surrounding your services all the time? Or is there a better way of doing it?

You have to get yourself and your trustees out of the way and see things clearly. You do have to really put your beneficiaries first. A much harder task than you might think when you feel a loyalty to staff and trustees and you don’t personally want to be associated with failure’.

On being objective in decision-making

‘You’ll often hear people say, “We’re the only ones that can do this, we’re better, we have stronger values, we’re different from other organisations in the same field.” But if you stand back and take a hard look, are there other organisations who run these services well? The critical thing for me was being really honest about the needs of our beneficiaries and acting in their best interest.’

On accepting that struggling on isn’t necessarily the best answer

‘… I worried that because we had no reserves that made us unstable, so if something unexpected happened we could collapse in an unmanaged way and that was not fair on the beneficiaries. I believed that the critical issue was not whether 4Children existed but whether our services did (we ran around 47 nurseries, 100 children’s centres and a range of youth services). It was more important to me that there was a nursery for those parents in three months’ time.

If you’re constantly saying “I don’t know if we can keep going”, what you’re doing is spending a huge amount of time and resource on fire fighting. When we handed our services to other providers all the duplication of costs associated with running a charity, the senior team, trustees, governance and auditors could go directly to services.

In the end, out of a staff team of 1,400 there were 46 people who were made redundant. These were the senior team and the back office support staff. You’ve got to really think about where the money goes. So I felt it was the right thing to do. You don’t need two chief executives who could both run similar types of organisations.’

On finding and working with the right partner

‘I reached out and talked to lots of people but there was one organisation that I thought was a better values match for us and so was quite honest with that chief executive about where we were at (which was not yet merger stage). But I trusted his judgment to understand where we were and how we could work together.

When the trustees decided we should merge, the two CEOs and Chairs met and  between the four of us we all agreed that the primary focus would remain on the beneficiaries; in a way that’s all that mattered, we focused on acting in their best interest. That was really helpful because of course it gets tricky on the way, since you’ve got a huge amount of detail to negotiate. But that sort of gave us that rock that we’d go back to.’

On controlling the message

‘It was important that the messages about the transfer of services didn’t get out. If it had, the whole process might have been undermined. It was really hard to keep the message about what we were trying to do contained to those people who needed to know but I would say it’s critical. One of the conflicts for me and the senior team was that we were building up an organisation that was really values driven. And I remember saying to the staff “I will always tell you the truth even if it’s unpalatable”. But then I had to start lying, because I couldn’t tell them—because there was a bigger, greater good. That was really, really hard for me.’

On communicating with commissioners

‘Of course the complicated thing was that we had 151 services across 56 local authorities and each of those had to be negotiated separately. It was entirely up to the Local Authorities whether or not they agreed with our recommendations. I rang each of them personally and explained our position, apologising to them for the difficulty we were presenting them with. I had been having very honest conversations with Commissioners since I joined the organisation 18 months before we went into administration and colleagues and I had worked hard at building more positive relationships with the Local Authorities. With each of them I made a recommendation about what could happen to the services. Most took this recommendation, while some took the opportunity to change their position and took the services back in house.’

On managing the press

‘All the way along the line we had clear key messages and a clear answer for any questions we might be asked. We had a plan.

We didn’t want it to get out to the press but at any point it might have. There were a couple of times I thought we were going to just lose control over the messaging but we didn’t. We managed to keep it really quiet which is amazing…by the time we got to the end and ready to go public it became “this is a good news story”.’

Read the full transcript of our interview with Imelda.

*For more context on what led to the closing see a detailed article written at the time.