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To keep going or to close down?

The hardest of NPO Board decisions is how to face an organisational existential crisis.

There is no doubt that the COVID pandemic has wreaked havoc among non-profit organisations. Many NPOs now face the harrowing prospect of deciding whether to keep going or to close down. Boards of Trustees are well-advised to approach this juncture with utmost care. I got to thinking about this after a call from the chairperson of a small NPO that faces this very situation. This was not a call about getting involved with something new and exciting - it was a call about the survival of an organisation that has served its stakeholders for many years. I suspect that many other NPO Boards now face the same existential crisis.

There is much to be said for persistence in the face of adversity, for the grit and resilience of keeping an organisation going through these incredibly trying times. Reflecting on my own experience, I know that organisations facing closure can be turned around and can indeed go on to thrive against the initial odds.

However, there is also something to be said for knowing when to stop, for the awareness and honesty of closing down at the right time and in a way that avoids the pain of an ignominious ending. It is this possibility that is most frightening and is thus often evaded.

Facing the decision to keep going or to close down is a complex and time-sensitive process. To vacillate and limp along is likely to erode the capacity to wind up gracefully. On the other hand, to jump the gun on closing down could bring about the end of an organisation unnecessarily. There is no way to sugar-coat an existential crisis.

When such a decision occurs to the leaders of an organisation it must be brought into focus as a matter of the highest urgency. This is a task that falls primarily to the governing Board. Boards must carefully consider the strategic options - and there are more options than might appear to be the case.

Keeping going can take other forms apart from maintaining the same momentum. For example, an organisation may wind down (instead of closing down altogether) - degrowth is a valid option as a way to sustain the organisation. Organisations may also share resources or even merge with other organisations to keep crucial programmes going. How to keep going depends on the unique context and circumstances within which each organisation must operate.

Closing down - that most dreaded possibility - can also be approached in various ways, other than an abrupt shutdown. If it is clear that the organisation is not sustainable over the short term, and the prospect of raising additional resources is weak, then a planned closure may be the best option. Closing down in a sensitive and ethical manner is only possible if it is approached before the organisation runs out of resources. Here, timing is crucial. A planned closure allows for a gracious exit and gives everyone more time to prepare themselves.

This decision-making process is not one to be taken lightly and calls for cool heads, steady hands, and a high degree of ethical sensibility. In this situation, it is crucial to develop a shared sense of the state and prospects of the organisation in a way that is heedful of the emotions involved but is not swept away by them.

Although every organisation faces a unique set of circumstances, there are approaches and tools that can facilitate the thoughtful consideration and response to a very tough governance question.

 

 

Seelan Naidoo | Public Ethos Consulting

Principal Associate, Public Ethos Consulting

Public Ethos Consulting offers rigorous, holistic organisational analysis that is especially recommended for boards of directors, annual strategic planning and reviews, performance planning, and to inform organisational change initiatives.

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