After a long period of waiting on the 8th April 2020 the Chancellor announced a £750m package to support struggling charities during the coronavirus pandemic. The measures announced involve cash grants being provided direct to a number of charities providing key support services during the current crisis. There are also a number of Community Foundations and other organisations who have launched funding programmes to assist local organisations in responding to the challenges of the Coronavirus Pandemic. We have gathered a list of available funding which charities may apply for to assist them during this time from a regional, nationwide and Scotland specific support. For further details click here. The Government has also announced some financial support measures which we still await further details on, however, what we do know can be found here.
Where restricted funds have been given to your charity for a specific purpose i.e. to deliver a project or for a specific reason, then it is the individual or organisation providing those monies that determines that there is a restriction on the use of those funds. However, when awarding your charity these funds initially, these funders could not have foreseen the situation that we all now find ourselves in and so it may be possible that funders would be willing to allow you to use the funds for a different purpose or reason.
It is essential to communicate with funders to assess whether the use of restricted funds can be amended in the short term, potentially to support your charity’s continuation in the current climate. Documentation of the Trustees decision making process is vital when approaching funders and it will be important to obtain documentation of specific agreements or changes of use that may be put in place in the short-term. Trustees also clearly need to consider whether this is the right action for your charity to take in terms of fulfilling other commitments and its plans for the future.
Where restricted funds comprise of donations received from many individual donors, it may not be possible or practicable for you to contact them all individually to ask permission to use the funds differently. If trustees consider it appropriate in the circumstances, they may consider using their normal methods of communication with donors such as bulletins or their website to inform those donors that they are proposing an alternative use for those funds. As long as there are no objections raised within a set period of time then the Trustees can document the decision to change the use of these funds.
As you will likely be aware the government recently launched the Job Retention Scheme and the term ‘furloughed employee’ has become one we are sadly increasingly familiar with. The scheme pays 80% of an employee’s salary where they cannot work, up to a maximum of £2,500 per month and payments will be back dated to 1 March 2020. For further information regarding the scheme, along with a template letter, please click here.
Furloughed employees will be able to volunteer in their communities to help people affected by the coronavirus pandemic, but not at their usual organisations. A furloughed employee can take part in volunteer work or training as long as it does not provide services to or generate revenue for their own organisation. It may be possible therefore for your charity to collaborate with other similar organisations with regards to furloughed employees and volunteers.
The Charity Commission and OSCR advise that all charities have a defined reserves policy which identifies funds that can be freely spent by a charity on any of its charitable purposes. Under normal circumstances, Trustees would look to maintain a healthy level of reserves in line with their policy to effectively help them through any loss of funding streams for example. Charities now clearly find themselves in an unprecedented situation whereby Trustees need to do their best for their charity. Trustees must have the confidence to utilise these reserves, where necessary, by firstly appraising the current financial situation of the charity, assessing the short to medium term needs and then acting accordingly in the best interests of their charity. The reserves should be expended on helping your charity to continue to deliver its services and support your beneficiaries in this time of undoubted need. Trustees will also need to consider any original plans for which these reserves had been budgeted, as it may no longer be possible to deliver those plans on the timescales originally planned and agreed.
There are potentially a number of scheduled and regular payments which you could consider deferring to aid your charity’s cashflow in the short to medium term. HMRC have issued guidance on the deferral of VAT payments. The deferral will apply from 20 March 2020 until 30 June 2020 and all UK businesses (including VAT registered charities) are eligible. For further information please read our article here.
Further to this you should review your outstanding invoices for payment and pay essential suppliers first and, where possible, negotiate alternative credit terms with suppliers for non- essential spend. In addition, if relevant to your charity, you should consider discussing scheduled rental payments with your landlords to determine if payment holidays or extensions can be agreed.
Clearly wherever possible it is important to try to submit these on time to your relevant charity regulator. It should be noted that both the Charity Commission and OSCR accept uploaded documents via their online portals which may make the process easier at this time. Both regulators have acknowledged that it might be difficult for some charities to complete these submissions on time and have noted that they would take an understanding and proportionate approach to this. They have stated that no charity in this situation will be penalised for being late with their submissions.
Unfortunately meeting face-to-face is not going to be possible at this current time so holding virtual meetings is considered to be a good alternative. Some charities have specific provisions in their governing documents to allow meetings to take place over the phone or using digital solutions, however others do not. In the current unprecedented circumstances, the regulators are happy if charities choose to hold their meetings in these ways even where the governing document doesn’t specifically note anything about this. Importantly this will allow charity trustees to have key discussions and to take decisions at this extremely difficult time.
Where you decide to holding virtual meetings, you should record the method of this meeting, those in attendance, the discussion process and conclusions reached and the actions and timescales determined. This will ensure that you continue to demonstrate good governance for your charity.