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The impact of COVID-19 for Charities

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If you are involved with a charity especially perhaps if you are a trustee or an executive, you will undoubtedly be feeling the impact of the crisis. Charities come in so many shapes and sizes that a single solution is not possible. We have set out below a range of help and guidance available and we are happy to discuss with you how to best manage your situation.

There are a number of issues you need to consider to maintain your regular activities, ensure you meet your charity commission and other regulatory obligations and, crucially, optimise the cash flow.

Governance – It will be important to check how you are affected. It is still necessary to file accounts and your charity commission return although they are likely to give some leeway. Some older constitutions may not cater for virtual meetings so if you are making important resolutions or decisions by this means you should consider following up in writing with a formal minute of what was done and why.

Many charities will immediately look to see ways in which they can assist with the present crisis but you do need to make sure that any support you provide is within your charitable objectives and if not look to see if they can be extended.

Cash Flow – The sudden drop in donations from the public is having a significant effect on income. You may need to get creative with how you can fundraise under the present restrictions. Many grant making bodies are changing their approach and you may want to contact them to see if you are affected.  Where the charity provides commissioned services, you will need to be in touch with your commissioning body to see if and to what extent it is able to pay you during this time.

Careful budgeting to forecast your income will be essential. It is critical to understand what out flows you can control. Where there is a deficit, you will need to consider the use of reserves and in certain cases approach your donors to see of there can be a release of the terms on restricted funds.

Once you have undertaken this exercise you will be able to consider the support you might need from the public purse.

Government and public purse support

As part of the COVID 19 support charities across the UK will receive a £750 million package to ensure they can continue their vital work during the Coronavirus outbreak.  This will include:

  • £360 million direct from government departments. This will include support for:
    • hospices to help increase capacity and give stability to the sector (potentially up to £200m)
    • St John Ambulance to support the NHS
    • victims’ charities, including domestic abuse, to help with potential increase in demand for charities providing these services
    • vulnerable children charities, so they can continue delivering services on behalf of local authorities
    • Citizens Advice to increase the number of staff providing advice during this difficult time
  • £370 million for smaller charities, including through a grant to the National Lottery Community Fund. This will support those organisations at the heart of local communities which are making a big difference during the outbreak, including those delivering food, essential medicines and providing financial advice
  • A commitment from the government to match donations to the National Emergencies Trust as part of the BBC’s Big Night In fundraiser later this month – pledging a minimum of £20 million.

The government press release notes that “Departments will now work at pace to identify priority recipients, with the aim for charities to receive money in the coming weeks. The application system for the National Lottery Community Fund grant pot is expected to be operational within a similar period of time.

Clearly this funding will not be available to all charities, but the other business support mechanisms may also be of assistance COVID-19 Business Support Hub. Perhaps the most relevant of these is furloughing employees. The furlough scheme is available to all charities, but you will need to watch if you are also receiving funding from a public source as this may restrict your ability to reclaim via the job retention scheme. It is understood that the portal for making claims here will be available from 20 April so there is a little time for you to review this.

Restart plans

Finally, it will be wise to have a recovery or restart plan in place so that you can aim to get going again as quickly as possible once the crisis is over.

The detailed formal guidance is available at:

https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the-charity-sector

but as mentioned above we are more than happy to help you understand how your case is affected so please contact Steve Robinson, Lisa Spearman or Wendy Bambrick to see how we can help.

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