Trust Runs Out of Money – Why It Happens and What You Can Do

If you’re reading this, you probably worry that the money in your charitable trust is disappearing faster than you expected. It’s a stressful spot, but you’re not alone. Many trusts hit cash‑flow problems because of a few common mistakes. The good news? You can spot the trouble early and take practical steps to keep the trust alive.

Spot the Warning Signs Early

First, watch your bank statements. A steady drop in the balance, especially after big expenses, is a red flag. Look for recurring costs that keep growing—administrative fees, rent, or professional services that weren’t budgeted. If you notice grants and donations drying up for two quarters in a row, that’s another alarm bell.

Second, check your income‑vs‑expense reports every month. A simple spreadsheet can show you where the money is going. When the expense column consistently tops the income column, you know you’re in trouble. Don’t wait for the annual audit to reveal the gap; catch it now.

Third, listen to your board and staff. If they start asking, “How will we pay for the next program?” or “Do we have enough to cover payroll?” that anxiety signals a cash squeeze. Open conversations keep everyone on the same page and prevent surprises.

Fix the Money Problem

Start with a quick budget freeze. Pause any non‑essential spending for a month. That could mean postponing a community event, renegotiating a lease, or holding off on new hires. Cutting costs doesn’t mean killing your mission; it means buying time to rebuild.

Next, hunt for fresh income. Reach out to existing donors with a short update on the trust’s needs. A clear, honest message—"We’re short $10,000 this quarter and need your help"—often sparks quick contributions. Look for matching‑gift opportunities or local businesses willing to sponsor a program.

If donations aren’t enough, explore short‑term financing. Some banks offer low‑interest lines of credit for charities, especially if you have solid assets. Use this only to bridge the gap, not as a long‑term fix.

Another option is to restructure the trust’s assets. Talk to a financial advisor about selling under‑utilized property or investing a portion of the endowment in low‑risk, income‑producing vehicles. A well‑planned investment can generate steady cash flow without endangering the principal.

Don’t forget legal routes. If the trust’s bylaws allow, you might amend the mission slightly to open up new funding streams. Merging with a similar organization can also pool resources and reduce overhead.

Finally, set up a monitoring system. A quarterly cash‑flow forecast, updated after every major donation or expense, keeps you ahead of the curve. Share this forecast with the board so everyone sees the same picture.

Running a charitable trust isn’t easy, and money problems can feel overwhelming. But with early warning signs, smart budgeting, and a proactive fundraising plan, you can stop the drain before it empties the tank. Keep the focus on why the trust exists, and the finances will follow.

Gareth Sheffield

Charitable Remainder Trust: What Happens If It Runs Out of Money?

This article breaks down what really happens if a charitable remainder trust (CRT) runs dry before the end of its term. It looks at the effects for both the income beneficiary and the charity that’s supposed to benefit. We’ll talk about what causes a CRT to lose funds, ways to spot trouble early, and what lawyers and trustees typically do if things get dicey. You’ll also find practical tips to prevent a trust from going broke in the first place. Find out how to avoid headaches for everyone involved.