Losing major funding: what your charity should do

If a major grant or contract has just ended, do not panic and do not make rushed decisions. First, work out exactly how long your money lasts — a simple cashflow to the point you run out of cash. That figure tells you how much time you have and shapes every decision that follows. This playbook takes you through the first days, the first weeks, your duties, and your options.

Losing a big chunk of income is frightening, but most funding crises are survivable with a clear head and early action. The worst outcomes usually come from denial or panic — carrying on as normal until the money is gone, or making irreversible cuts before understanding the position. The steps below apply to charities across the UK; the Charity Commission steps apply in England and Wales, with OSCR and CCNI equivalents noted.

Losing significant funding or a contract you cannot replace is a reportable serious incident where it threatens your ability to operate or your reserves cannot cover it (Source: gov.uk / Charity Commission serious incident guidance, accessed 10 July 2026).

Before you do anything: work out your runway

The most important number is how long your money lasts. Before you cut anything or tell anyone, build a simple cashflow forecast: your cash now, plus income you are certain of, minus your committed costs, week by week, until the balance hits zero. That date is your runway. It converts a vague fear into a concrete timeframe and stops you making panic decisions you cannot undo.

Separate your unrestricted funds from any restricted funds, which you cannot use for general running costs. It is unrestricted cash that gives you room to manoeuvre.

The first days

In the first days, understand the position precisely and bring the trustees together. This is about facts, not decisions: how much you have lost, how long your money lasts, what is committed, and what is flexible. Convene the trustees early — they are collectively responsible and must be part of every significant decision from the start.

Confirm the loss. Check exactly what has ended, when, and whether any of it is recoverable or open to appeal or negotiation with the funder.
Build the cashflow. Model your runway — the date you run out of unrestricted cash on current commitments. Keep restricted funds separate.
Convene the trustees. Brief the board urgently. Trustees are collectively responsible and must lead the response; do not leave it to one person.
List commitments. Identify fixed costs (staff, rent, contracts) and which are flexible, and note notice periods and liabilities.
Protect cash. Pause non-essential and discretionary spending straight away while you plan. Avoid taking on new commitments you may not be able to meet.
Do not tip into worsening the position. If insolvency looks possible, be careful not to incur new debts you cannot pay — take advice early.

The first weeks

In the first weeks, decide on a plan, take advice, and act while you still have choices. With your runway known, weigh your options — cost reduction, reserves, new income, merger, or orderly wind-down — take professional advice, talk honestly to those affected, and make and record clear trustee decisions. The aim is to act early, before the money runs out and your options close.

Take professional advice. If insolvency is possible, get accountancy or insolvency advice now, while you still have options — the Commission recommends this as soon as you are aware of the risk.
Weigh your options. Consider cutting costs, using unrestricted reserves within your policy, seeking bridging or emergency funding, merging or transferring services, or an orderly wind-down.
Handle staffing lawfully. If redundancies are needed, follow a proper process — fair selection, consultation, notice and any redundancy pay. Take advice before acting.
Talk to your funders and partners. Tell existing funders early; some offer flexibility or emergency support. Other funders may help bridge a gap if you approach them honestly.
Report a serious incident if it applies. If the loss threatens your operation or exceeds your reserves, report it to the Charity Commission (OSCR / CCNI equivalents).
Record every decision. Minute the trustees’ decisions and the reasoning — this protects trustees and shows you acted responsibly.

Your duties, precisely

Facing a funding crisis, trustees have duties to manage the charity’s resources responsibly, to consider a serious incident report, and — if insolvency is a risk — to act with particular care and take advice. These duties depend partly on your legal structure. Check each against your situation.

Managing resources responsibly

Trustees must act in the charity’s best interests and manage its resources responsibly, which includes acting quickly and carefully in a financial crisis. The Charity Commission expects trustees to understand their charity’s finances and act on early warning signs — reviewing the position against budget regularly rather than waiting for the account to empty. All trustees share this duty, whether or not they have financial expertise.

The Charity Commission (serious incident)

Report a serious incident where losing significant funding or a contract threatens your ability to operate and serve beneficiaries, or where reserves cannot cover the loss. There is no fixed minimum — judge significance in the context of your charity; if in doubt, report. Report promptly; the duty rests with the trustees. In Scotland report to OSCR; in Northern Ireland to CCNI.

If insolvency is a risk

The Commission strongly recommends taking professional advice as soon as trustees are aware their charity may be facing insolvency. Insolvency does not always mean stopping immediately, but trustees must act with great care to avoid worsening the position of creditors — broadly, not running up debts the charity cannot pay. The rules differ by structure: charitable companies and CIOs have specific insolvency processes and trustees can face liability for continuing to trade while insolvent; unincorporated charities and trusts differ again, and trustees may be personally liable for debts. Take advice on which applies to you.

Going concern and your accounts

A charity is a going concern if it can continue operating for the foreseeable future and the trustees intend to continue. If you prepare accruals accounts under the Charities SORP, you must disclose in the accounts where the charity is not a going concern, or where there is material uncertainty. If a funding loss casts doubt on this, discuss it with your examiner or auditor.

Who to call

Keep this to hand. Early on, the priority is your trustees and an accountant or adviser who can help you understand your options while you still have them. The wider set of contacts is below.

Your trustees — first; they must lead the response together.
Your accountant, independent examiner or auditor — to model the position and advise on going concern.
An insolvency practitioner — if insolvency is a realistic risk; take advice early.
Your existing funders — early and honestly; some offer flexibility or emergency support.
Emergency and bridging funders — and your local infrastructure body (CVS) for signposting.
An employment adviser or solicitor — before making any redundancies.
The Charity Commission — serious incident report where it applies (OSCR / CCNI equivalents).
A support body — such as the Cranfield Trust or your local infrastructure organisation, for free or low-cost help.

Reducing the risk next time

Once the immediate crisis is under control, build the resilience that makes the next shock survivable. Charities most exposed to a funding loss are those reliant on a single major funder, with thin unrestricted reserves and no forward cashflow. You cannot remove all risk, but you can reduce your exposure and buy yourself warning time. Record the lessons in your risk register and reserves policy, and report them to your trustees.

Practical steps that help: diversify income so no single funder is critical; hold a reasoned level of unrestricted reserves; keep a rolling cashflow forecast so you see problems early; track when each grant and contract ends and plan renewals in advance; recover a fair share of core costs in every bid; and review financial risk in your risk register at least quarterly. The Charity Commission’s guidance on reserves (CC19) and financial difficulties (CC12) is a good grounding.

CharityIQ can help you keep a live view of your funding pipeline and when each grant ends, so a cliff-edge is visible months ahead rather than the week it arrives.