A charity that hosted the launch of Theresa May’s anti-loneliness strategy has gone bust, citing “insurmountable” financial problems and warned that more voluntary organisations are likely to follow it into insolvency in the coming months.
The Cares Family, a group of charities that ran community projects tackling social isolation in London and the north-west of England, closed suddenly on Tuesday. It blamed the cost of living crisis, funding issues and a “slew of other factors”.
Staff were reeling at the unexpected closure, with insiders saying there had been little sign the charity was on the verge of collapse. The charity’s chief executive, Nicola Upton, had been in place for just a few weeks, and staff had received a pay rise in June.
Upton described the closure on LinkedIn as “heartbreaking”, saying this “wasn’t what I anticipated my role would become”. She added: “Sadly, insurmountable issues have come to light and I’ve spent much of my time working closely with the board to seek any viable alternative to closure, and sadly, there is not.”
In a nod to the increasingly tough financial climate for charities, Upton said: “I am not the first charity CEO this year to be sharing news like this. I won’t be the last. The challenging economy, rising costs, and a slew of other factors have brought us here.”
An internal memo to staff seen by the Guardian said: “This is a situation that has developed over a significant period of time and is not any individual’s fault. We understand this is extremely upsetting and very hard to understand. The insolvency of the charities has come about due to long-term financial challenges, the current cost of living crisis, and the increasing competition for funds from all sources.”
It adds: “Our development team has done a brilliant job raising money in recent months, but our costs have risen beyond what our fundraised income can cover – ultimately our costs have become far higher than our income, and there is not time to address this before the charities are unable to operate.”
The National Council for Voluntary Organisations warned earlier this week that one in five charities may be forced to close services this winter because of financial stresses caused by the soaring costs of wages and energy, coupled with shrinking incomes.
Insiders said they were baffled that a seemingly financially sound organisation should close so suddenly, without warning to staff or beneficiaries, and so soon after appointing a new chief executive. When its founder and former CEO, Alex Smith, quit earlier this year he said he had left the organisation “more secure than ever”.
After 12 years at the helm, Smith stood down in May to join the Obama Foundation. The previous month, in an article for the Civil Society website, he described the charity as a “healthy, happy organisation confident in itself and more secure than ever”.
The Cares Family brought together 26,000 older and young people through community projects aimed at building up social connections and friendships to tackle loneliness.
The charity was set up by Smith, a former Ed Miliband aide, after he met an isolated older neighbour in north London and took him for a haircut. The experience sparked the idea for North London Cares, which was formed in 2011 in the wake of London riots, mobilising young people to help with the clean up.
Branches in south London, Liverpool, Manchester and east London followed. By 2018 it had caught the eye of ministers and helped launch the loneliness strategy for May, then the prime minister, at one of its social clubs in south London.
The five Cares charities were deliberately planned as separate legal entities to avoid them all having to close if some faced financial difficulties. It is not clear why that plan has not worked.
One staff member posted on social media: “So North London Cares has ceased to exist. The Cares Family had financial oversight on all the 5 branches, so we had no idea we were in difficulty. We are so sad that there has not been time to properly inform our community partners and all our incredible older and younger neighbours.”
