I write this, as the implication of the announcement of the further lifting of lock-down restrictions starts to dawn on me and my friends and colleagues. There is much excitement about the prospect of a few nights away either to stay with family or just get away from home. But so far through the Government’s announcements, there has been only marginal good news for charities, as so much of their service provision and fund raising is reliant on people being with people.
I recently attended a seminar hosted by the Third Sector, where the leaders of four diverse charities discussed how this period has affected them and it is clear there have been plusses and minuses. All the charities have been saddened by the furloughing of staff but buoyed by the drive and camaraderie of those left still working to keep going and make the best of the opportunities afforded. The vague sense that more could be done to fund raise online has been, by necessity, realised and been successful, whilst the loss of big regular fundraising events such as the London Marathon has been a real blow. Governance regimes that seemed unwieldy have been shown to be supportive and clarifying in a crisis, whilst long term commitments and contracts have been unhelpful. The charities have found new digital methods of providing services, which in some cases have reached service users who would never have been able to use the services before but the closure of community facilities may not just be temporary as hysteresis takes effect.
It was also clear from the seminar that charities are properly “sandwiched” at present. The demands on their resources have increased massively. A loneliness charity reported its demand was up 800%; whilst funds and resources are falling. The Alzheimer’s Society reported a £45m shortfall in expected income this year and the inevitability of redundancies and reduced research into dementia, as a result.
What should charities consider as we move into another financial quarter of business as unusual?
- A continued focus on governance – keeping the charity’s objects and policies in mind and under review at all times. Try to be dispassionate and use the policies to guide decision making.
- Focussing on financial resilience – draw up scenarios for the financial future of the charity and what it will mean – being prepared for bad outcomes. Look hard at unrestricted funds and how these can be best applied in the current circumstances. Consider ways that restricted funds may be used if schemes are put in place to alter or widen the scope of use.
- Be familiar and follow Charity Commission Guidance – https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the-charity-sector
- Serious Incident Reporting – charities should keep the need for a serious incident report to the Charities Commission in mind, particularly if Covid-19 is representing a significant harm to your charity. Significant harm is defined as harm to beneficiaries, staff, volunteers or others who come into contact with your charity through its work, loss of your charity’s money or assets, damage to your charity’s property or harm to your charity’s work or reputation.
- Partnerships – consider ways to work with other charities or other partners to share the resources you do have, which may even suggest…
- …Mergers and other “corporate” actions – all the economic arguments around duplication or internalising of costs equally apply to charities and it is worth considering who may be a viable option for a formal merger. The Charity Commission also notes that a merger may be useful to continue or improve services to beneficiaries. Legal advice will be needed about possible modes of merger, charity law compliance and charities will also need to take serious consideration of cultural fit.
- Real Property assets – have you got the correct property configuration for your workforce? Can your property assets be better leveraged in a new home/office mode?
- Financial distress – look at Charity Commission advice https://www.gov.uk/government/publications/managing-financial-difficulties-insolvency-in-charities-cc12/managing-financial-difficulties-insolvency-in-charities and take professional advice. Charity trustees may be liable under insolvency laws for inappropriate actions taken by a charity with financial troubles. As lots of charities have a corporate form, methods and tools designed for companies may help a suitably structured charity through a period of financial distress, such as a creditor’s voluntary arrangement.
- Where services are opening up, take heed of Government guidance and requirements for doing this in a safe and compliant way. For example coffee shops and restaurants will need to keep names, dates and contact details of all customers in order to support track and trace efforts. This will need to be done in a way compliant with Data Protection laws. Charities as employers will also need to heed guidance applicable to the service in relation to keeping employees safe.
- Keep the value from positive outcomes during lock-down – don’t lose what has been learnt through the lock-down by going back to old ways.
- Look at operational risks and perform contract reviews – can you reduce long term obligations and introduce more flexibility or allow more time/brevity in how obligations are met in your commercial contracts? Many contracts include variation clauses that should be checked to ensure that variations are properly communicated, agreed and documented.
- Get advice if contracts you are relying on are being cancelled or amended to your detriment.
Footnote for individuals
While we are busy enjoying our first shared moments with friends and family, we should consider what we can do to support the charities in our communities too. Putting it bluntly, money will help! This can be done through direct donations or individuals can consider a longer term gift in their will, called a legacy. Charities are usually unaware of legacies until a will is proven and so it can be helpful to notify a charity that you have made such a provision, especially if it is substantial.
Alternatively, there are still plenty of opportunities to volunteer. Please see https://www.ncvo.org.uk/ncvo-volunteering/i-want-to-volunteer/volunteering-coronavirus for information.