Stephen Carrick-Davies shares lessons learnt from closing the Inclusion Trust, a charity which for many years pioneered a new pedagogy and use of ICT to re-engage school-phobic and excluded pupils in learning. He argues that whilst it is understandable that many associate closure with failure, we need to re-think our notion of endings and recognise the positive potential for closing well and leaving a lasting legacy.
WE ARE MIDWIVES, NOT UNDERTAKERS!
For many people who love innovating and establishing new programmes to benefit society, the word 'closure' is an anathema. Social entrepreneurs are hard-wired to birth new projects and ideas, not to close and bury programmes in the ground. Indeed, every week the Charity Commission in England and Wales receives hundreds of applications for establishing new charities and there is a plethora of support to help people of vision in their quests to establish new projects to help change the world. But what about those leaders who believe that it's time to close and stop programmes?
In a year when we have seen numbers of high-profile charities forced to close, (including '4 Children' last month), is there a danger that we focus on the new at the cost of giving real support to established charities? Do we help Trustees consider their organisation's exit strategy and support them to decide if it is ever right to stop and close gently? I believe there are positive lessons to be learnt in closing well.
In December 2015 I was appointed for an initial 6 month period as the interim CEO of the Inclusion Trust. In its day this charity ran innovative, disruptive and impactful new programmes. Its 'NotSchool' platform alone supported over 10,000 pushed-out young people. Nevertheless, in common with very many charities working in the education sector, the Trust's 'world' had changed dramatically. Major variations in commissioning of services and huge disruption in the Ed tech market had impacted on the Trust's income and service. Then there was the relentless pressure to 'monetarise' and expand the range of services.
I was asked by the Trustees to independently assess the current state of operations the charity was providing. Within 2 months I knew that the task was going to be challenging and I focused on helping the Trustees face the choice to either radically re-invent the services and model of delivery, or close. After a thorough assessment of a potential new business model and consultation with stakeholders and clients, I proposed a new business model and programme of work.
Whilst as a new CEO I brought some impartial and dispassionate advice on this, I asked staff from NotDeadFish, an educational consultancy charity to challenge the business plan's viability. Too many organisations overestimate the potential grants or have a belief in sales that just doesn't stack up against the harsh reality of the today's markets. It is easy when a Trustee group wants something to work to keep overestimating the income streams, brand positioning and potential. The rigor of involving an unattached 3rd party was essential, and NotDeadFish challenged us to view the longer-term viability. Yes the new business model was exciting and could have worked, however the 'runway' of time and money from which the new venture was to take off, was shortening by the week and together we took the decision that it was the right time to close. Being open to being challenged by external critical friends is crucial, accepting unpalatable truth is a leadership strength.
In February 2016 the Trustees instructed me to start the orderly and professional closure of the charity and design a legacy programme.
Closing a charity properly is difficult but we did it; and what's more we managed to give away over £130,000 to other charities as part of our legacy. As the last person out of the door, I now have the opportunity to reflect on the last few months, to share observations and the lessons learnt in closing our programme under 4 key areas of operations: People, Leadership, Timing & Money and Legacy. I share these in a spirit of honesty and humility; we didn't get everything right, but through careful planning and support we ensured that nothing serious went wrong.
I hope this first-hand advice may help others facing similar challenges. But more importantly, I hope sharing this experience helps us reassess the challenges of sustaining charities in an age of austerity. Why is it that so many of the organisations closing are those working with the most vulnerable children in our society? If we still seek to live out the vision that "Every child matters," can we do so without challenging funders and ourselves to assess whether every penny matters also? Are we as efficient and impactful as we like to think we are? Does thinking about closing focus our attention and help us ask what else could be done if we shared our money, our mistakes, and our understanding built on years of experience?
PEOPLE MATTER IN CLOSING
To build a team from scratch you have to have vision, enthusiasm and wisdom; to develop a team into a high-performing unit you need patience, discipline and energy; but to disband a team and close its work you need emotional intelligence and humility.
Having to make staff redundant is one of the hardest jobs any leader may have to undertake. This task is especially hard if you work in a small team and know your staff well. Whilst your organisation has a commitment and responsibilities to clients, funders, and partners, I would argue that when it comes to closure, your first responsibility is to look after your staff and volunteers. One of the reasons we chose to close when we did was because we knew that we could not only honour our contractual responsibilities to staff, but be in a position where we could support staff properly and not be rushed.
There are many leaders more qualified than me to give advice about supporting staff through redundancy, but here is what I learnt.
• It's obvious but make sure you communicate with your staff first, before anyone else is notified. Stories of staff being informed of bad news by text message through colleagues can happen in all organisations. So make sure you talk face to face straight away and ask your Chair or another Trustees to support you in this task. (We did it immediately at the end of the meeting at which we had made the decision to close).
• Make sure you get appropriate legal advice and support from Human Resources professionals. As part of our closure strategy we hired external HR consultants who helped us ensure that the contractual obligations we had with staff were followed meticulously. We offered this external HR support to staff and were also able to provide re-training for staff and career development help.
• Caring for Trustees is also vital. As volunteers ultimately responsible for the governance of the charity, Trustees were understandably nervous about their responsibilities for closing the charity. We consulted with the Charity Commission and with our auditors and took external advice which helped us all understand our obligations and the importance of abide by our charity's constitution. We extended charity insurance for the year after closure, made sure that Trustees were involved in the legacy programme judging (see later), involved them in the archiving of past successes and took them out for a final celebration meal at the end. Working together as a team is the only way to close a team.
LEADERSHIP MATTERS IN CLOSING
The object of closing - in the words of one of our Trustees - was, "To land gracefully whilst making a splash and leaving lasting ripples."
As none of us had previously closed a charity we continued to seek support from the team at Notdeadfish, who had helped another charity close. Their support was invaluable and gave us the confidence to be positive about the opportunities our closure afforded.
Again there is lots of advice out there on leadership and making difficult decisions but in relation to closing a charity this is what I learnt:
• Be decisive in your decision. You will agonise about making the decision, but once you make the decision announce it clearly in a positive way. We sent out news of our closure to over 3,000 organisations, individuals and stakeholders and announced it at the same time as launching our legacy programme (see later).
• Make sure you are clear that the decision is a collective one. Minute the decision formally and plan your communication strategy at the same time as you make the decision. Identify who you will need to tell and when and get external help to execute the communications strategy if you need.
• Recognise the qualities of leadership in making unpopular decisions. Repeatedly people outside of the charity world said to me, "But why? Your work is needed now more than ever." The pressure you feel when people imply that somehow you are letting others down in closing can be tough.
• Closing a charity can stir up a range of powerful emotions and be very painful not just to staff but to partners and clients who may feel real grief. Re-frame your role, not as an undertaker but as a relay-runner committed to finishing your part of the race and handing the baton on to others. Recognise that closure is not failure but can help draw attention to the important work you have done. You can quickly become a powerful advocate for the other organisations in your sector and illustrate from your experience of closing how important it is for their work to still be funded. As soon as you announce you are dispersing funds you become very popular!
• Keep communicating with your Trustees regularly. Define different tasks to different Trustees and involve them in some of the tasks. Make sure that they support you in the process.
TIME AND MONEY MATTERS IN CLOSING
It took 8 months from the time we first made the decision to close, to signing off our final accounts and notifying the Charity Commission and Company's House. We were lucky we did not have long term contracts with suppliers, landlords, partners or funders. Don't underestimate the time it takes and understand the framework in which you have to complete various tasks (including submitting final accounts). Here is what I would advise:
• Discuss with your accountant how you are going to be able to audit your final set of accounts. We were able to extend our last accounting period to 18 months so our final year accounts ran until 30th September 2016. This then became our cut-off date to complete our closure and disperse funds.
• The Trustees were fortunate that I was able to extend my initial 6 month contract to 10 months to steer the process through and complete the closure. It's obvious but you need someone in charge.
• Negotiating the crystallization of staff final pension funds can take an inordinately long time. We recruited a specialist pension advisor to negotiate on our behalf and it took us 2 months to finally agree the terms, pay and close the fund.
• Regardless of whether you develop a legacy programme or not you will still have after-closure responsibilities and costs. Letters will still come, old debtors may come out of the woodwork and your past accounts will still need to be held on file for 7 years and someone has to be able to deal with after-closure inquiries.
As well as making sure you have the budget to employ staff to close the charity, you will have some unusual closure expenses and after-closure costs which you need to budget for. We set up a closure cost spreadsheet and updated this weekly as we became aware of new expenses. We realised that we needed to future-proof the organisation and asked some suppliers if they can invoice us upfront for the next few years for example in IT and Web hosting. Before we announced the dispersal of our assets through our Legacy programme we had to ensure that we had made provision for all eventualities including the unknown unknowns! Other ways we sought to save money and budget for closure included:
• Transferring our office to a virtual office at CAN Mezzanine which gave us a telephone number, mailbox and meeting room so we could run on a skeleton service for the last 3 months of operation and a full year after closure.
• We made provision for consultancy in key areas including our legacy programme (See below), pensions, HR and communications. Once you have made staff redundant you still need people to undertake tasks.
THE FUTURE MATTERS IN CLOSING
Trustees were clear that they wanted to launch a legacy programme as part of the charities closure. This involved thinking carefully about how we launched this programme, how we might handle requests for funds, what sort of projects we might want to fund and what risks there might be in developing this legacy work. Again the support from Notdeadfish was invaluable.
Once we had closed the charity's operations and office, made staff redundant, paid off all our liabilities (including crystallising the pension fund) we estimated that that we had approximately £130,000 to disperse. We knew in reality that this funding would not go far, nevertheless we knew if we could get it into the hands of the right projects it would make a very real difference and could kick-start new innovative work. These are the steps we took to plan and execute this legacy programme.
• We had to first be sure that all monies remaining were unrestricted funds and could be dispersed in line with what our constitution specified about dispersal of funds on closure.
• We spoke to the Charity Commission to ensure that we understood this correctly and got feedback on our approach.
• We launched the legacy programme asking a wide audience 3 key questions:
- What should be done for pushed-out learners?
- How could the Inclusion Trust best reallocate its remaining £140,000?
- How can the patterns of school exclusions be changed?
• We sent out this call out to over 3,000 individuals and organisations including schools, charities, parliamentarians and funders.
• We used the opportunity to showcase our most recent work and report 'The Alternative should not be inferior' asking applicants how they would use any funding to build on this work. It was fascinating to see how drawing attention to our past work inspired applicants. They learnt a great deal about our methodology and impact.
• We reviewed all submissions we received from a range of different types and sizes of organisations from across England. Some were one paragraph, others were 12 page proposals.
• We established a judging panel, which included an Independent Chair, two trustees and two external experts (who had experience of grant giving and charity financial management). This was vital to ensure that there were no conflicts of interest.
• Having reviewed the projects and the ideas we established some broad criteria which we would judge the applications so that we could assess each project robustly, fairly and transparently.
• We issued a standard short application form to all projects who had submitted ideas asking just 5 questions based on this criteria. We did not specify how much projects should ask for.
• In total 16 written applications were received and as anticipated we were heavily over-subscribed (In total the request for funding was over £650,000).
• Judges scored projects independently and then met to review scores and shortlist projects.
• Shortlisted projects were then invited to attend an interview where they presented their project, showing how our funded of their project would really benefit pushed-out young people and help leave a good legacy for the Trust.
• The quality of the project ideas was extremely high, and after 3 days of judging there was agreement on 7 final projects. Some projects didn't get all that they wanted and some got more!
• The decision to support the projects was ratified by the full Trustees board.
• Feedback from applicants, both those which were selected and those which were not, was that the process had been rigorous and fair. Many reported back that the process had helped them identify new ideas and approaches to support pushed-out young people.
• Before payments were made we drew up simple letters of agreement which the charity signed confirming that the restricted funding would be used for the project. This was important as we would not be around to monitor the funding spend.
• We published and announced the final list of legacy projects on the 30th September the day we closed. See http://www.inclusiontrust.org/ for full details.
AND FINALLY..... SMILING MATTERS WHEN CLOSING
This then was our story. We closed and managed to leave a positive legacy. Together these 7 projects across the country will reach more young people in the next 6 months than we did in the last 12 months of our operation. It is now their time to make an impact and also build models of sustainability and partnership. Every child still matters, and we made our last pennies matter too!
As we walked away from the last Trustee meeting, one of the long-standing Trustees; a gracious man now in his 70s smiled and, recounting a sign on a door he had seen earlier that day, said, "Don't cry at what has come to an end, but smile at what has been."
Indeed, but as I close the door for the last time, I'm also smiling at the thought of what has been started.