There’s no doubt, we are all living in exceptional times.
The coronavirus pandemic is causing significant challenges for individuals and businesses, and charities are certainly no exception. It has been reported that many charities will fail to survive and here are some of the issues being experienced:
- A loss of income arising from cancelled fundraising events, and the need to close charity shops;
- Donations being cancelled, or diverted to frontline organisations;
- An inability to provide services remotely, with income reduced or non-existent as a result;
- The challenges of adapting to remote working, where this is possible;
- An increased demand for their essential support; and
- The need to protect the health and wellbeing of their workforce.
Every organisation has their story.
So, with none of us knowing when our lives will return to normal, what should you be doing?
- Reliable management information and forecasts are essential.What income does the charity expect to receive? Have you contacted your funders? What is the charity’s cost base? Can those costs be trimmed? What reserves does the charity have? How long will those reserves need to last?Whilst it may seem impossible to answer some of these questions, it is important to make best guesses to inform decision making, and to keep the position under regular and frequent review.
- Keep an eye on the various measures being introduced by the Government.Whilst many of these do not benefit the charity sector, if you have members of staff that are now surplus to requirements, you may be able to take advantage of the Coronavirus Job Retention Scheme. Subject to certain criteria, this enables individuals to be furloughed, whereby they remain employees of the organisation, but with the Government contributing to the salary cost. For more information please click here.
- Consider whether any of your expenditure can be deferred to help with cashflow.Those registered for VAT will have those liabilities automatically deferred, but don’t forget to cancel the direct debit as the payment may still be taken. Those with staff could apply for a ‘time-to-pay’ arrangement for PAYE. Although remember that these liabilities will eventually become payable.
- Is there any new funding available?Whilst it is true to say that this is likely to be directed, in many cases, to those helping to tackle the current crisis, last week the Government announced funding of £750m to benefit the sector. For more information on this support please click here.There are also a number of other organisations providing financial support. Charity Bank and the Directory of Social Change are both committed to maintaining a list of the funding currently available.
- Ensure that the charity’s systems and controls remain robust.Working under pressure and working remotely, it may be tempting to cut corners or easy to take your eye off the ball. A perfect scenario for fraudsters ready to take advantage of any situation. The Charity Commission has been warning donors to be mindful of safe giving. It is equally important for charities not to become victims of any scams.
- Any charity looking to introduce new activities, either to lend a hand in the current crisis or to generate new income, needs to be mindful of their objects clause. Operating outside those objects can cause wider issues, including a potential tax liability. And, of course, VAT should also be considered.
- Look at the guidance issued by the Charity Commission, which is updated regularly.
And finally, with many charities concerned that they may not survive the current crisis, please do not be afraid to ask for help. Our specialist teams are committed to supporting this essential sector.
