Coronavirus and charities: key issues, and sources of information

Fundraising and trading

Many charities will be hard hit by the cancellation of key fundraising events, including the London Marathon, which last year raised £66.4 million for charity. The Fundraising Regulator and the IoF have also just issued guidance advising “all charities to reflect seriously on whether to continue public fundraising (face to face, door to door and private site) due to the increased health risk to the population at large, as well as to fundraisers and volunteers.” 

Charities that rely on trading for income will also face problems following a fall in high street footfall, as social-distancing, self-isolation and quarantine measures are stepped up.

It seems that charities should be eligible to access the Coronavirus Business Interruption Loans announced by the Government last week, but only if over 50 per cent of their income comes from trading, which would mean that a lot of charities dependent on other forms of fundraising would not be able to access these funds.

A number of sector bodies have written to the Government, asking the Chancellor to implement emergency measures to support the sector during the pandemic. It is very much to be hoped that the Chancellor is able to take steps to support the sector, given Matt Hancock’s recognition in his article for The Telegraph on 14 March of charities’ role in the “national effort to support the shielded”.

Online resources:

• The Fundraising Regulator has published guidance for charities needing to review their events, highlighting the need for good communications with participants, volunteers and spectators, considering in what circumstances donations may need to be refunded, and signposting section 11 of the Code of Fundraising Practice, which contains information on event cancellation and contingency plans.
• Charity Commission:
  • Charities should note that if donations have been received in relation to events that must now be returned, the involvement of the Charity Commission may be required to permit the refund of such donations.
  • In addition, the cancellation of an event may, in some cases, require a serious incident report to the Charity Commission.
• Charities with international challenge events organised will need to be aware of the FCO guidance in relation to travel.
• The IoF has announced it has opened up its member email service to all fundraisers who want information, signposting or support.
• We have articles on insurance arrangements, looking at how insurers and those who are insured may be responding to losses caused by the Coronavirus disruption, and possible exit routes to contracts.

Employment issues

Charities with employees will be grappling with the issues of home working, self-isolation periods and employee wellbeing.

It has been announced that the changes to the IR35 (off payroll working rules) have been postponed, but there are still a number of changes of which to be aware – both those arising from the Coronavirus situation, such as the emergency changes to statutory sick pay rules, and those that were already planned for 6 April (about which you can read more on our blog)

Online resources

• We have an article addressing:
  • the FAQ received from charities and businesses in relation to employment issues, including changes to the statutory sick pay rules, staff travel, staff re-deployment, and adjustments for vulnerable staff
• Mind has published information on “Coronavirus and your wellbeing”, aimed at helping those feeling anxious and having to self-isolate or work from home.
• The CIPD has made their resources in relation to dealing with the Coronavirus free to non-members.

Operational issues

The fall in fundraising and other income, especially when combined with a significant increase in demand for services in some cases, constitutes something of a perfect storm for some charities.

Trustees and executive boards will have to pay close attention to the finances of their charity, and should review the following:

• business continuity planning – including a review of the charity’s strategy and whether this should now be adjusted in the light of any increased demand on the charity’s activities and any fall in its income.
• cashflow / liquidity – including consideration of any use of the charity’s reserves, and discussions with banks regarding temporary overdrafts if appropriate and / or necessary.
• investments – the long term effects of the Coronavirus on markets cannot be known at present, but it would be prudent to keep investments and income derived from them under periodic review for the foreseeable future.
• Insurance – insurance policies should be checked to see what cover, if any, might be included in policies in relation to loss of earnings / interruption to business from a pandemic / epidemic or the occurrence of a “notifiable disease”. The ABI has suggested that a small number of organisations may have cover in place that will specifically provide for business interruption arising from notifiable diseases, but this kind of cover is not included as standard.

In relation to filing requirements, charities may find it useful to know that:

• Companies House has said that “If, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to your company being affected by Coronavirus (COVID-19), you may make an application to extend the period allowed for filing.”
• The Charity Commission has said that “charities that are due to submit an Annual Return imminently, but feel unable to do so, can call us to request a filing extension.”

When it comes to reporting serious incidents to the Charity Commission, the Commission has simply stated that “charities should continue to report serious incidents using the current guidelines and their own judgement and we will advise if and when this situation changes.”

Charities will therefore need to be alert to issues that will trigger the reporting requirement – which, in the current circumstances, could easily include issues relating to safeguarding of vulnerable beneficiaries, substantial financial loss, fraud, or data breaches as a result of more remote working arrangements are hurriedly put in place for employees.

The Commission has been reported to have said “it will take a pragmatic and proportionate response if trustees can demonstrate they are acting in good faith.” It has apparently also committed to providing a “helpful Q&A” in the next couple of days.

Charities also need to be more alert to fraud – the National Fraud Intelligence Bureau has reported that it has identified 21 reports of fraud where Coronavirus was mentioned, with victim losses amounting to over £800k.

Online resources

• We have articles addressing:
  • reporting serious incidents,
  • crisis management and business continuity
  • protecting yourself if another party is in financial distress and
  • directors duties if a charitable company is in financial distress

• The CFG has produced a guide for charity finance professionals considering next steps.

Vulnerable beneficiaries

Charities with beneficiaries who are particularly at risk from the coronavirus, including those with chronic respiratory diseases, heart disease, diabetes, and weakened immune systems, are seeing an increasing demand for their services, particularly the provision of information and advice about the Coronavirus.

In addition, any charity providing services to such beneficiaries will need to take steps to safeguard the health of those beneficiaries from in advertent transmission of the Coronavirus in the provision of those services.

Online resources

• Government guidance on:
  • social distancing and vulnerable people, and
  • home care provision.

Grant-making organisations

In a very positive move, a number of grant-making charities have announced they are committed to a flexible approach in relation to funding, to assist the charity sector across the country, including more than 100 funders signing the funder statement on Covid-19 created by the London Funders network.

In addition, the ACF has published a useful blog setting out three key considerations for funders, including its impact on their operations, its impact on the causes they support, and its impact on investments.

It also highlights some of the activities of foundations wanting to help the sector in these extraordinary circumstances, including that “…Italian foundations are looking at extending grants for six months without obligation and in other countries there is discussion on converting existing grants that were awarded as ‘restricted’ for specific projects to ‘unrestricted’ for any purpose in line with the charity’s objectives”.

However, from a legal perspective, it would be prudent for grant-making organisations to seek legal advice before making any changes to existing grants, as they would with any variation to an existing contract affecting the organisation. 

More information on issues arising from the Coronavirus

This article can only seek to highlight some of the main issues for charities and some of the online resources, in what is a rapidly evolving situation.

For more information on the issues charities may face as a result of the Coronavirus, head over to our Coronavirus hub, which will regularly be updated with new articles and information.