It’s estimated that more than three quarters of Scottish charities will be adversely affected by the pandemic in some way, not all of whom will be able to survive this period. A £4.3 billion income shortfall in the sector as a result of the first three months of the pandemic comes at a time when there has simultaneously been an estimated 43% rise in demand for charity services, according to the recent survey undertaken by a range of charity sector umbrella bodies and organisations such as the National Council for Voluntary Organisations, the Charity Finance Group, Acevo and the Institute for Fundraising.
Some help has come following the campaign by charity sector umbrella bodies #EveryDayCounts which put pressure on the UK Government to provide a rescue package. This was supported by over 300 MPs and peers, as well as, the Government Paymaster General, Penny Morduant, and resulted in an announcement on 8 April of a £750 million emergency support fund for the charities sector.
It’s certainly true to say that during this most difficult of times, the charities sector is stepping up to the mark to deal with the challenges posed. And our dedicated Charities Team is also here to help. We can guide you through the practicalities of continuing to operate as best you can and in new and innovative ways which demonstrate good governance, even if you cannot carry out your services and activities as before. This can include dealing with issues such as:
- Operating with reduced staff and trustee numbers
- Putting staff on furlough leave or having to make staff redundant
- Cancelling or postponing AGMs
- Managing any other immediate financial, property related, contractual or fundraising concerns
At a time when the demand for third sector services and support grows daily, it’s clear the survival of our third sector has never been so important. So we’ve brought together the information below on the help that’s available for charities and third sector and what charities can do about the immediate practicalities and challenges of continued good governance as they navigate their way through the Covid-19 pandemic.
Funding measures put in place to date
The UK Government’s charity sector rescue package
Chancellor Rishi Sunak has said that the £750 million emergency support fund will be provided through bodies such as the National Lottery Community Fund, with a total of £60 million of the fund will be allocated to Scotland, Wales and Northern Ireland. £360 million will go directly to charities such as St John Ambulance and Citizens Advice, “charities supporting vulnerable children, victims of domestic abuse or disabled people”, and £200 million to hospices. It will match pound for pound donations made to the BBC “Big Night”. This will be a 3 hour TV fundraising special splitting the funds between Comic Relief and BBC Children in Need. The Government will also provide a minimum £20 million donation to the National Emergencies Trust (NET), discussed further below.
The Government Furlough Scheme
The UK Government Furlough Scheme, a job retention scheme which pays up to 80% of staff wages up to £2,500 per month for affected staff is available to the third sector. Bodies such as Age UK, The National Trust, Cancer Research UK, Barnardo’s and Oxfam GB have all put large numbers of staff on temporary furlough leave.
The Third Sector Resilience Fund
This is a £20m emergency fund announced by the Scottish Government for charities, community groups, social enterprises and voluntary organisations based in Scotland that deliver services and activities in Scottish communities and are directly impacted by Covid-19. Priority has been given to the bodies most at risk and who require immediate help.
The key funding areas have been identified as follows:
- To meet the immediate practical needs of isolated people e.g. by preparing and delivering food, providing other essential supplies, dog walking etc
- To tackle loneliness and promote positive living, wellbeing and resilience, owing to social isolation.This can include providing telephone or online support services, group online support or providing digitally inclusive activities
- To ensure organisations have working practices to operate remotely by providing necessary equipment or software
- To assist any immediate financial crisis to pay staff and bills and keep the body running
- To ease the burden on statutory health and care services
- To provide support to adapt to the current crisis and help build the resilience to meet future needs within the community.
The fund provides grants up to £100,000. There is also up to £5m available in flexible 0% interest loans starting at £50,000. Please see the SCVO business hub for further details and qualifying criteria here.
The National Emergencies Trust (NET)
This emergency appeal fund was launched on 18 March. Prior to the Government’s announcement, it had raised over £14m for the Third Sector from the public, over 60 companies and 20 charitable trusts. Funds will be distributed through the umbrella body UK Community Foundations to its network of 46 local community foundations, including Foundation Scotland. The focus is on providing food to isolating people and supporting those with debt and mental wellbeing issues.
CAF Coronavirus Emergency Fund
So far the fund has raised over £5m and will give grants to small charities, social enterprises, community groups and other organisations with charitable purposes affected by the pandemic.
Virgin Money Foundation
This is a community resilience fund with £850,000 plus for the community groups to replace lost income and cover additional costs incurred through the pandemic. £500,000 will be made available to their existing beneficiaries.
Barclays Bank Emergency Fund
This is a £100 million fund. £50 million will be donated to charities working with vulnerable people and the elderly to help alleviate social and economic hardship. £50 million will be used to match the personal donations made by the bank’s staff to support the local charities of their choice that work with the community.
Lottery Heritage Fund
This is a £50m emergency fund to support heritage projects which are now in crisis because of the pandemic, and will support past and present grantees.
Immediate Practicalities and Good Governance
Charities who are concerned that they can no longer carry out their activities and services in the same way as before owing to the pandemic, which potentially breaches grant funding conditions, should approach the funders concerned. Many funders have already confirmed they are flexible and open to agreeing variations in how services will be provided, as well as reporting requirements and timescales.
Charities that require immediate financial assistance to cover their running costs, such as staff salaries and bills as well as their charitable activities should also consider using part of their cash reserves.
OSCR have already confirmed in their guidance on Covid-19 that they recognise most charities will need to change the way they work during the outbreak. Please note the following practical tips to help your charity operate more effectively during this time:
- Boards and management teams may now need to meet more frequently, but can no longer meet in person. OSCR have confirmed that all charities can now hold virtual meetings using facilities such as Skype, visual conferencing or telephone calls, even if their constitution does not allow it. The minutes must state that the meeting has taken place by virtual means to help demonstrate good governance.
- With trustees and members in isolation or falling ill, it may also become more difficult to hold a quorate meeting. A quorum refers to the minimum number of people needed to convene a meeting and make binding decisions. The necessary quorum for trustee and members meetings is set out in your charity’s constitution.
If you are unable to form a quorum, then any decisions which are made could be open to challenge and regarded as being invalid. OSCR have said that they will respond proportionately and with understanding to any concerns raised about a decision that is made without a proper quorum. This situation is however still best avoided where possible.
We recommend that any charities who anticipate that this could be a problem should immediately take steps to amend their constitution to reduce their quorum requirements during this period. We would be pleased to help with this. Depending upon how your charity is constituted, this may mean obtaining a members resolution and providing notice of the change to Companies House and/or OSCR.
- Some charities have set up a temporary 'Cobra style committee' during this time. This is to ensure that important decisions can be made quickly without the delay of convening the board, who may not always be available. Any Cobra Committee and its remit should be approved by the board and could consist of a small number of trustees along with the Chief Executive or Manager. Decisions taken by the committee should be reported to the board as soon as possible to ensure full accountability.
- Many charities have had to cancel/postpone their AGM during this period. As the annual report and accounts are normally approved at the AGM, this can delay the annual report and accounts being finalised. OSCR are trying to encourage as many charities as possible to lodge their annual report and accounts online on time, within the usual 9 month period of their financial year-end.Where this is not possible however because the AGM has been cancelled or postponed, OSCR have said they will be flexible about this and will not penalise any charity for late lodgement of the annual return and annual report and accounts.
- We have received various enquiries from charities that want to help in some way during the pandemic by carrying out new services, activities or by fund raising. Please remember that acting outside the scope of your purposes, albeit with good intentions, is still misconduct in the administration of the charity. If your charity does need to widen its charitable purposes, it will first be necessary to apply to OSCR seeking their consent. Although OSCR’s offices are currently closed and they are short-staffed during this time, they have said that applications marked as urgent -Covid-19 will be given priority. Once again we will be pleased to advise you on this.
It remains to be seen whether the additional funding being made available will be enough to support the third sector. At this time when the demand for third sector services and support grows daily, the survival of our third sector has never been so critically important. But as with all great periods of challenge, this is also a period where the sector can reassess and look at new ways of working more efficiently and going forward.
We’re here to support the charity sector during this time and assist with all your business needs and concerns. Our initial 30 minute discussion is pro bono. Please contact Victoria Simpson for further information.