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SHRUB is a charity, which means that most of its money comes from grants received to support and deliver its projects. As funding comes to an end, all charities have to question what to do and how to support their mission forward. SHRUB is also a cooperative, which means participation of as many members as possible in the decision-making process is crucial. This document will highlight the current financial situation of SHRUB, so that you can get a clear picture of where we currently stand.
There are no circumstances in which we can feasibly maintain the organisation while operating at 22 Bread Street, and thus this process will not be centred around suggestions on how to do that.
Instead, we are working on how we can preserve what is important to our community beyond SHRUB’s physical structure.
SHRUB’s Money
Most of SHRUB’s money comes from external funding in the form of grants. Some of its money comes from income instead (money made by the cafe, food sharing donations, bike repairing workshops, etc). At the current level of operation, we have an annual budget of £240,000. Over the last two years we have managed to even that out to approx. 50% income, 50% grant-funding. This means that about half the money of SHRUB comes from grants. You can find more detailed information about this percentage in our last AGM report here.
This funding is found through the active effort of the Funding Working Group. Fundraising is the active process of seeking financial support, while funding is the financial support itself that is provided to an organisation or project. Fundraising efforts are undertaken to secure funding, which is then utilised to meet the financial needs and goals of a particular project, initiative, organisation, or cause. The Funding Working Group actively seeks new funding opportunities, and aims to ensure projects can continue without having to close.
Over the last two years, The National Lottery Community-Led Programme has funded almost half of the costs associated with the Zero Waste Hub. From March 12th, we do not have any other funding secured for any of the activities carried out by SHRUB, including both the Zero Waste Hub and the Wee Spoke Hub.
This means that as funding ends, SHRUB now has to make double the income to sustain the same costs. Despite all of its efforts over the past six months, the Funding Working Group has not managed to secure continued funding. This is primarily a result of an increasingly competitive funding landscape, a partial consequence of the ongoing cost-of-living crisis.
Over the 10+ years that SHRUB has operated, the organisation has supported a variety of community projects, all of which are unbelievably important. The amount of funding received over the last two years, in combination with sales and donations, has only just covered our costs. During this time, we invested a significant amount of our reserves into maintaining the projects we have. This means that we are running on the income that we make on a day-to-day basis without much savings for periods of crisis.
As of 11th February, our total money in the bank totals about £24,000. We can make a bit more through income from the cafe, food sharing hub, etc, but our income alone won’t cover our costs.
We make approximately £12,000 per month through sales and donations. At the current level of operation, we would need to make another £10,000 per month to cover all costs. Where previously this difference was filled by grant-funding, we are forced to find a way to reduce our costs and wind down projects, until more funding or income is secured. As a result, restructuring, and cost-saving measures need to take place -
SHRUB’s Costs
24k may sound like a lot of money but for an organisation like SHRUB, this is not much. In fact, this is only enough for us to survive for about 1.5 months. You can check our current monthly costs and income below.
SHRUB Current Costs
Zero Waste Hub | Wee Spoke Hub | Shared Running Costs | Total | Monthly | Explanation | |
Cost | £152,557 | £34,885 | £46,810 | £234,252 | £19,521 | > this is what our current monthly costs are |
Income | £103,200 | £33,600 | £0 | £136,800 | £11,400 | > this is what we are making right now |
Difference | -£97,452 | -£8,121 | > this is the additional income we need to make per month, at current level of operation |
The difference between our income and costs without funding shows that we cannot keep running on income alone. This requires SHRUB to go through two processes:
Reducing all possible costs immediately
Increasing income to cover the costs
Staff and trustees imagined what scenario could be created if we cut most of our costs and we ran as a primarily volunteer-led organisation. Our conclusions are the following: Even if we reduce staff costs, and continue making sales through both venues, we are still making a deficit - meaning our income can’t cover our costs. You can see this data below.
SHRUB Running on Minimum Costs (only two staff members per venue).
Zero Waste Hub | Wee Spoke Hub | Shared Running Costs | Total | Monthly | ||
Cost | £128,514 | £44,914 | £18,500 | £191,928 | £15,994 | > this is what our monthly cost would be after reducing staff costs |
Income | £103,200 | £33,600 | £0 | £136,800 | £11,400 | > this is what we are making right now |
Difference | -£55,128 | -£4,594 | > this is the additional income we need to make per month |
Important note: Minimum staff costs cannot be cut without asking staff to work for free (which is unfair and leads to burnout).
To put it into perspective, our main costs for rent and utilities are £760 per month at the Wee Spoke, compared to £6,270 per month at the Zero Waste Hub.
What Does This Mean in the Short Term?
The Zero Waste Hub
In order for SHRUB to survive we need to bring its costs in alignment with our income (which is the money we can make without funding) so that we can pay all our bills, rent, staff, etc while we look for more funding opportunities. If we manage to secure more long term funding, we can stop relying only on income and donations, and be a bit more stable. The problem is, we don’t know if and when that will happen, and - especially - it’s not possible within two months, which solidifies our need to close 22 Bread Street.
Due to the financial unsustainability and the risks associated with keeping the Zero Waste Hub premises, we couldn’t identify any scenario in which we keep 22 Bread Street open without risking legal consequences.
There are some extra costs (end of rent fees, staff contracts, licenses, etc) associated with closing a charity, that the trustees are required to cover. Becoming insolvent means being forced to shut down and can create legal and reputational problems.
The Wee Spoke Hub
At the moment there is one last stream of funding that could be available to us within our time-frame, specifically for the Wee Spoke Hub. This is the Sestrans: People & Place Community Fund (up to £50.000 for one year). We will know whether we receive the funding or not by the middle of April.
This funding would cover the gap there is between the costs of the Wee Spoke Hub and its income, allowing it to not only survive but to start building reserves.
If we don’t get this funding to support our costs, the sad reality is that the Wee Spoke Hub will also lose its space. At that point, SHRUB won’t have any options but dissolving, becoming dormant or merging with another charity.
What Happens if We Cannot Cover Any of Our Costs?
In that case we are faced with two possible scenarios:
SHRUB has to close as a legal entity and be dissolved
SHRUB can become ‘dormant’ as an organisation but remain open as a legal entity
Closing a Charity
As heart-breaking as this is, we can’t keep operating if our costs are too high. If this scenario becomes the most realistic, we could guide SHRUB through a ‘good ending’, ensuring that all costs are paid and all legal requirements are met. If we come to this, we need the community to come together at our EGM to decide together whether to close SHRUB. Our constitution states that, if closure becomes unavoidable, ⅔ of the membership will need to vote on that at the EGM. Trustees ultimately have the responsibility to close a charity if it cannot sustain itself.
Becoming Dormant
We might choose to make the charity ‘dormant’ instead of closing it. A dormant charity has no income nor costs, but it’s not formally closed and its name is still active and cannot be taken by any other organisation. There is a bit more bureaucracy that goes into keeping a charity dormant - someone will need to take charge to keep filing annual returns every year (even if in a simplified version) until the charity is reopened, for example.
What Does this Mean in the Long-Term?
As bad as this might sound, this is not necessarily the end of SHRUB. We will work hard to collect all of its resources, processes, and successful systems and share them with the community. This means that at any time, volunteers can come together and use all of this information to look for more funding to reopen SHRUB and rebuild it from scratch.
This is both true in the case of the company being closed or dormant. The only differences are highlighted above, and we will make sure that the process of reopening is as easy as possible.
We are all worried about losing the community around SHRUB, but we believe two things: 1) Communities do not only exist in a physical space. With SHRUB you have found like-minded people to share part of your life with. These contacts will not disappear, and the SHRUB community will keep existing outside its physical space. We will welcome any idea of how we can ensure the community can continue supporting one another and find similar services within the city, and then start rebuilding projects once funding has been secured. If you have any ideas on how SHRUB can keep supporting its community without a physical venue, please use the meetings as a space to discuss these options.
2) We don’t think this is the end of SHRUB. In fact, SHRUB as we know it, is the third reincarnation already. This means that anyone can put together a group of people, look for more funding and reopen the charity in its fourth reincarnation. Whatever happens, we are going through it all together!
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