Given the wide variety of charities' activities and sources of funds, many may at some point face financial uncertainty. This is particularly likely during an economic downturn, when more people need charities' services but many sources of charity income are in decline. If a charity finds itself in financial difficulties, the risk of insolvency will be greater if the trustees do not take action to address the situation.
This section sets out our guidance for charity trustees, outlining steps that may be taken to lessen the risks of insolvency and describing their legal position. Potential insolvency can be a complex and detailed matter; professional advice may be necessary and we recommend that it is taken as appropriate.
You should also read our guidance Helping charities through the economic downturn, which offers practical tools and resources as well as our research on how charities are being affected.