The disability organization Leonard Cheshire carries out a major restructuring aimed at saving £ 18 million a year.
The charity said they had spent more than their income “over a long period of time” and “worked within a overdraft facility”.
The charity employs about 5,000 people, consisting of almost 3,700 full-time positions, of which 440 are in full-time back office roles.
No reductions in frontline staff are expected, but all back office staff have been offered voluntary redundancies, with 140 such departures agreed and a second round of voluntary redundancies being carried out this month.
The charity hopes to be able to keep any forced redundancies at a low level after voluntary redundancies have ended.
“As part of our strategic transformation and resizing, we will significantly scale down and halt some of our current UK and international program work,” said a spokesman for the charity.
Disability rights activist Doug Paulley published two emails sent by Leonard Cheshire’s CEO Ruth Owen to staff in March and April.
The first email says the charity must save £ 18 million over the next 12 months to address a “financial challenge” that has been “built up over several years”.
It says: “For a long time we have spent more money than we have received in total, and it has drained the money we have in the bank to such an extent that it is just not sustainable anymore – we have run out of cash and we have to make savings of around £ 18 million over the next 12 months. “
It also says: “The issue is that we do not have sufficient reserves and work within an overdraft facility because reserves decrease over time due to expenses exceeding revenues,” it says.
“In recent years, Leonard Cheshire has undergone a significant expansion of programs, many of which have not been fully funded through full cost recovery, and has also made significant investments in IT and property improvement.
“It is only recently that the challenging position in terms of cash has been highlighted through improved financial reporting and addressed by the management team and the board with a full understanding of what we need to do. We have explored all options to address the underlying issues and will to continue to do so. “
The email says the causes of the financial problems include “rapid expansion of non-revenue activities to fully fund the activities and the associated staffing structures”, charges that do not keep track of rising costs, “sudden and significant cuts in the sources of UK government funding sources for our international work ”and two years of the coronavirus pandemic that affected the charity’s collected revenue and increased costs such as PPE accessories.
It says that the charity’s single biggest cost is its salary payment, so it must reduce the number of employees to become more financially sustainable.
The second email says the charity had identified £ 9m worth of savings in the previous month.
It says that some areas “will lose a high proportion of people, and new ways of working must be defined as a result”.
It says that in addition to the dismissal process, the charity looked at all areas to find where it could make savings.
This included inefficiencies such as craftsmen traveling from Birmingham to Devon to perform basic building maintenance.
This indicates that, although no decision has been made yet, the charity seems likely to waive the leases of its London and Wolverhampton offices as “it seems increasingly likely that it will not cost to maintain the current office space in the long run. Efficient.” .
Ruth Owen succeeded Neil Heslop as CEO of Leonard Cheshire in November 2020.
Heslop, who joined the Charities Aid Foundation as CEO, said Third sector in 2018 of his plans to increase the number of people Leonard Cheshire supported without significantly increasing the charity‘s expenses.
A spokesman for Leonard Cheshire said: “We are reshaping and resizing the organization and balancing our ambitions for the future with a robust view of costs, as we increase the organization’s impact in a way that is financially sustainable.
“With a new CEO and management team, work is underway to reshape and revive the charity and in a sustainable way increase its impact. Transformation is at the heart of the new organizational strategy that is being developed.
“While we are implementing measures to reduce overall costs, as well as increase revenue, it will unfortunately be inevitable to lose jobs outside frontline care and support services.
“We will always try to keep these to a minimum and handle any redundancies as sensitively as possible. This will not affect the delivery or quality of our frontline services for accommodation and supported accommodation.”
The charity strives to complete the restructuring by the end of the calendar year.