Third sector companies urged to seek early advice after austerity measures force closures

A leading Midlands insolvency practice is advising third sector companies to take early action in the face of financial difficulties after announcements that more than 2,000 charities are being forced to close services as local authorities slash funding.

With the effects of the coalition government’s funding cuts also biting hard across the sector an increasing number of organisations will struggle to stay afloat over the next 12 months.

Experts at Cranfield Business Recovery, based in the West Midlands, say directors and trustees must be proactive about recovery by obtaining professional advice at the earliest opportunity to make sure their company remains a force for good in the market.

The latest round of cuts puts additional pressures on charities, voluntary groups and not-for-profit organisations who find themselves under increased financial strain at a time when there is higher demand on their services.

Patrick Murtagh, Financial Director at Cranfield Business Recovery, has already supported a number of third sector companies in the West Midlands through the difficult financial times and believes knowledge will empower struggling bosses.

He said: “Seeking professional advice should not be left until it is too late.”

“There is a temptation to stick one’s head in the sand during difficult financial times and try to weather the storm. But it is vital that third sector bosses who are facing financial difficulties talk to professionals sooner rather than later.

“Gaining the knowledge about available options is essential to moving towards a recovery situation.”

Patricia Grant, director at Warwickshire-based social enterprise, Education 4 Conservation, has seen the austerity measures biting particularly hard in youth services. She said: “The third sector is in complete turmoil. Funding cuts have had a knock-on effect throughout youth services in particular with many support agencies already having closed their doors, a number of which provided youth volunteers that in the past were relied upon to help keep this sector going. What is left of grant funding is being chased by more organisations, and there simply isn’t enough to go round. Organisations that might be able to weather this storm really need to look at their operational and management strategies and seek advice from experts before it’s too late.”

Patrick Murtagh has more than 20 years of experience working with companies in financial distress, also said that even those who fear they are in the direst financial straits may not necessarily doomed to fail if they receive the right advice and support.

He added: “The third sector is made up of many companies and charities whose services are vital to the health, happiness and well being of our society, now possibly more than ever. It is important that as many charities, voluntary organisations and not-for-profit organisations as possible not just make it through these testing financial times, but actually develop and flourish.

“The best advice I can give is to act early – there is no shame in being proactive and asking for help to get out of financial difficulties.

“Gain the knowledge about the many options that are available to aid recovery and move forward with help from the professionals.”

Cranfield Business Recovery, which is based in Coventry city centre, can also offer advice for charity trustees about their responsibilities, as well as a range of other support.

The company, formed in 2001, provides a bespoke service and works with private sector cases, as well as those in the third sector.

Denise Taylor, Bridge PR on tel: 024 76 520025, email: denise@bridgepr.co.uk

Patrick Murtagh, Cranfield Business Recovery on tel: 024 7655 3700, email: patrick.murtagh@cranfieldbusinessrecovery.co.uk.

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