The Charity Commission has produced a guide covering a number of topics surrounding the COVID-19 pandemic, including Government support available, coping with financial difficulties, mergers and collaborative working, keeping staff safe, formal meetings such as AGMS, use of reserves and restricted funds and supporting trading subsidiaries.
The Commission is reassuring charities that regulation will be as flexible and simple as possible throughout the duration of COVID-19, whilst helping trustees to be aware of the wider impact of their decisions on their charity.
In this blog, I will signpost the advice in some of these areas.
Government financial support
Click here to find a range of funds available to charities from the government in respond to Covid-19.
Mergers and collaborative working
Collaborating or merging with one or more other charities could be one of the best ways to meet your beneficiaries’ needs. The Commission has shared some guidance and a checklist on mergers and collaborative working here.
If you are a charity searching for partners for collaboration or a merger, you can search the register of charities to find potential partners here.
Using reserves and restricted funds
Many charities may be about their financial position as a result of COVID-19 restrictions on fundraising. Trustees should be assessing their short, medium and longer term priorities to see if their planned projects or spending plans need to be amended. To help cope with unexpected events, reserves can be spent.
Some funds or assets may have restrictions on their use. Those that are internal only may be able to be re-prioritised. If they are restricted or endowment funds, they cannot be spent at the trustees’ discretion, but can only be used for a particular and defined purpose.
Typically, a non-charitable trading subsidiary can be a source of vital income for the charity that owns it. Charity trustees may need to decide if their charity can temporarily support the subsidiary to help it through these difficulties if they are at risk of no longer being financially viable due to COVID-19.
Trustees have a duty to put the interests of your charity first and consider whether financial support can be justified as an investment. The Trustees should have good grounds to believe that the subsidiary will become profitable within a reasonable timescale and also be satisfied that the charity can afford to provide the support and that its assets will be not be placed at undue risk.
However, other options would include restructuring or closing the subsidiary which will need to be considered by the subsidiary’s directors in conjunction with the charity’s trustees, after taking professional or specialist advice.
The next step
There is much more valuable advice on the Charity Commission website and I would encourage anyone connected with a charity struggling as a result of COVID-19 to access this page here.
To contact your local UHY charity adviser, please get in touch using the contact form below.