Thankfully relocation is something which charities have to undergo relatively infrequently. However, precisely because it is something that comes up but rarely for the majority of charities there is often a lack of experience and expertise available to the Charity in undertaking the process.
In this note I intend to highlight some bullet points aimed at enabling the Charity to achieve its relocation with the minimum of disruption and without any nasty surprises along the way. Among the most important points to consider are:
- Plan ahead – you will be astonished at how long it takes:
- to work out what the Charity needs to achieve through the relocation;
- find a suitable property;
- get everything set up so you can dispose of your existing property and move to the new one with the minimum of disruption.
- Identify the strategy behind the relocation
Identifying the right property to move to requires the governing body to have agreed what the Charity needs from its new property and how relocating to new property will affect and, hopefully, enhance the Charity in achieving its charitable objects.
- The governing body
A governing body selected to provide the necessary skills and experience for running the Charity on a day to day basis is unlikely to have all the skills and experience needed for managing a relocation project. You may want to consider additional appointments to the governing body to cover any weaknesses.
- Project relocation sub-committee
Establish a sub-committee of the governing body, possibly with co-opted members but with no more than six members overall to whom the relocation project may be delegated by the governing body. The relocation subcommittee should be given a clear remit so its members know the extent of their authority and when matters need to be taken back to the governing body.
Also ensure that any instructed professionals have a clear line of communication so that they are not in the position of needing to obtain instructions from more than one person on any aspect of the project they are dealing with.
You need to ensure that the Charity’s constitution authorises the relocation project as planned and to establish whether any approvals from the Charity Commission are required.
The governing body must ensure that the Charity’s financial and other resources are directed to achieving its charitable objects most efficiently. The costs of moving and thereafter of operating from the new property need to be fully assessed to enable the governing body to judge whether the relocation project can be justified in financial terms.
Some parts of a budget can be very hard to pin down but there are elements within the budget which should be firmly fixed at the earliest possible stage. For example, if the charity is having a new building built or it or has to carry out substantial works to its new building before it can move in then the design work for that should be done and, once agreed by the project committee, the drawings should be placed in a locked drawer guarded by a fierce project manager. Bear in mind that contractors make most of their profit out of variations to the contract. Variations are also a significant factor in delay.
Once fixed the project should be progressed against the budget with increases in cost resisted wherever possible.
You need to take your staff with you in both senses. You should be mindful that subject to the terms of the employment contract, a relocation may give rise to a redundancy situation and therefore you may need to include in your budget redundancy costs.
- Appoint the appropriate advisers
First you need to identify what advice you need, which can be difficult to do if you lack the appropriate experience in the governing body. The areas of expertise required will vary depending on the nature of the relocation project, but, as a minimum, you are likely to need advice from surveyors, accountants and lawyers with the appropriate qualifications and experienced in property transactions for charities.
If there are substantial building works involved a project manager is a vital part of the team. It will be their job to control costs by being fierce with the contractors and equally fierce with the Charity to prevent expensive changes being requested
Ensure that the tax consequences of any relocation are fully understood and budgeted for before any commitment is made. If a capital sum is being realised on the disposal of your existing property there may be tax consequences from that.
You will need to fully understand how VAT will apply as, frequently with charities, particularly educational ones, VAT is an irrecoverable expense and therefore forms part of the cost.
- Key dates schedule
The Project subcommittee should prepare a schedule of key dates for decisions and for completing steps in the process so that any problems and their knock on effects can be identified and addressed.
Do not commit to vacating the existing premises on a fixed date linked to the projected date when the new premises will be ready. All too often there is a delay in the new premises being ready and the charity will either end up in breach of contract or of no fixed abode.
Try and arrange completion around times that are convenient to the charity. For example if the charity is a school you will ideally want to move over the summer holidays or, failing that, over one of the other holiday periods. Moving mid-term is likely to be difficult if not impossible.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.