How to prepare your charity as it changes

It can be incredibly exciting seeing your charity go from strength to strength. Sooner or later you might start thinking about expanding operations, bringing in new staff, or launching new activities and events. But realistic and sustainable growth requires careful preparation as you’ll need to ensure you have the right skills, processes, and insurance in place to cope with the planned changes, as well as any unexpected ones. Indeed, if your charity is going through a growth spurt or change of direction, it’s important that you get up to speed with the wider not-for-profit sector and look out for signs of challenges that might arise in the future.

Back to basics

What changes you can make to your charity will depend on its structure and governing document. There are four types of charity structure, each one determining whether or not a charity can do certain things, such as employ staff, or provide particular activities and services. These are:

·       charitable incorporated organisation (CIO)

·       charitable company (limited by guarantee)

·       unincorporated association

·       trust

The government website provides full explanations of each structure, which may help you decide which one is most suitable for you. Changing your charity’s structure can be complicated, but the government website also offers practical advice on how to do so. They also explain how to change your charity’s governing document, and the trustees should make any necessary amendments to reflect the new changes.

Staff and volunteers

Many charities start off being run only by the trustees, but over time they often need to take on extra staff or volunteers. When you start recruiting, it’s important to let candidates know your expansion plans up front, and make it very clear what will be expected of them. Make sure you choose people who are aligned with your wider goals and beliefs, and that each new recruit is entering a role that is within their capabilities .

Partnerships

It can sometimes help to join up with another organisation whose work is relevant to your charity so you can pool your resources and talent. Collaborations can benefit both parties, leaving you better equipped to deal with the growing demands and responsibilities. But if a partnership doesn’t sound appealing, it could still be useful to talk to a larger organisation who has already gone through similar growth. They may be able to mentor you on what to expect during the expansion process and how to prepare.

Income

Once your charity starts to earn more than £5,000 per year, you must register it with the Charity Commission. Check their website for more information on how to register and the various reporting and accounting procedures you may have to conduct, depending on your size.

Finance

As your charity grows, you will need to keep a tighter grip on your finances to ensure that every penny is accounted for. Monitoring transactions, handling budgets, and balancing the books are all key to a successful expansion, so if figures are not your forte, we recommend hiring a skilled accountant or financial expert to keep your business banking and balance sheet in check.

Risk management

Every charity, no matter what structure or size, is responsible for managing its risks and reducing them to within an acceptable level. It is good business practice to complete a risk assessment, which you should update periodically. This involves identifying the risks that your charity might face while doing its day-to-day business, and weighing up how much of that risk the charity itself could bear. If your charity is growing, taking on new people, purchasing new assets, or providing new services, you will need to revisit the risk assessment and update it accordingly.

Insurance

As your organisation evolves, the risks you face – and the potential consequences of those risks – will also change dramatically. You will therefore need to keep on top of your insurance needs, from the compulsory Employer’s Liability and Motor insurance, to the optional (but advisable) Public Liability and Property insurance.

Once you start to have paid employees, it becomes a legal requirement to have Employer’s Liability insurance. This covers your charity against claims brought by staff in the event that they are injured as a result of negligence by your organisation. Likewise, it is compulsory to have Motor insurance if your organisation acquires any vehicles. 

If the management and structure of your charity changes, you may wish to consider Trustee Indemnity or Directors and Officers cover to protect your trustees, committee, and senior management should a claim be made against them.

Any changes or additions to your activities and services, even if it’s as seemingly simple as moving business online, will create new risks for your organisation. It is therefore essential that you discuss any changes with your insurance provider or broker so you can reassess your insurance options and make sure you have the right cover. 

Likewise, you should let your broker know if your charity acquires more assets and equipment, moves premises, or buys a new building, otherwise you may find yourselves underinsured or even uninsured, in the event of a claim.

Get in touch

For more information, call our team on 0345 040 7731 and one of our team will gladly advise you on all your charity’s insurance needs.