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Alternatives to closure

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If your organisation is still financially viable, you may want to consider alternative options to closure.

You’ll need to decide whether closure is in the best interests of your cause or if an alternative would be more appropriate.

Merger

A merger is where two or more organisations formally come together.

It’s most common for one organisation to transfer everything they own to the other. Typically this leads to one legal entity being closed.

You can learn more about the types of organisation mergers and the different reasons for merging on our merger guidance pages.

Hibernation

Hibernation is where an organisation pauses the bulk of its activities but continue to be a registered legal entity.

This isn’t a formal process or action that a charity can take, but there can be circumstances where it might be appropriate for a charity to be slightly less active for a fixed period of time.

Trustees will remain responsible for the organisation. They will still have obligations to file accounts to Companies House and the Charity Commission.

The decision to take this approach would need to be reasonably justifiable as being in the best interests of the charity. The decision must be properly taken and recorded, following the rules in the organisation's governing document.

The overarching duty of trustees is to further their charitable purposes so they should consider if there’s a better alternative option available to ‘hibernating’ without much prospect of ‘waking up.’

Adapt your purpose

If the organisation's purpose is no longer a practical or appropriate way to advance the cause for which it was set up, you may choose to evolve and change your purpose.

You’ll likely need to change your governing documents with an updated purpose. If you’re a charity, you should follow the Charity Commission's guidance on changing your governing documents.

Radically change your ways of working

This may be the best option if your organisation's purpose remains valid, but the changing environment requires you to change how you deliver your work. This could include ceasing or reducing some activities or implementing new ways of advancing your cause.

Changes should still be linked to an overarching organisational strategy rather than a series of reactionary tactics.

Learn more about tools and techniques for managing change.

Remember, pursuing an alternative to closure doesn’t prevent you from choosing to close at a later point. However, undertaking another option can take time, energy and resources which may limit how you close in the future.

If your organisation has limited resources, you may need to consider whether you can afford to pursue the alternative and the risks of not deciding to close now.

Things may also be more complicated if you’re facing insolvency or deregistration. If this is the case, you should seek specialist legal advice.

This page was last reviewed for accuracy on 06 July 2023

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