Key considerations for charities in the current crisis - 28 April 2020 update

Andrew Studd, Partner in the Russell-Cooke Solicitors, charity law and not for profit team. Chris Rowse, Partner in the Russell-Cooke Solicitors, charity law and not for profit team.
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4 min Read
Andrew Studd, Chris Rowse

Updated guidance on the Coronavirus Job Retention Scheme

Follow this link for our up-to-date briefing on the Coronavirus Job Retention Scheme.

New package of support for charities

As well as match funding public donations to the BBC's Big Night In charity appeal on 23 April, the Government is providing three pots of grant funding for charities:

  1. £750 million for frontline charities across the UK, including hospices and those supporting domestic abuse victims
  2. £360 million for charities providing vital services and helping vulnerable people through the crisis, including hospices, victims charities and vulnerable children charities
  3. £370 million for small and medium-sized charities at the heart of local communities which are making a big difference during the outbreak, including those delivering food, essential medicines and providing financial advice

For the first two pots the Government will identify priority recipients for grants, whereas the third pot will be administered in part via the National Lottery Community Fund.

Reactions to the announcement have been fairly uniform: it is a helpful first step but more needs to be done. In its latest UK Civil Society Almanac, NCVO estimated that voluntary sector income was around £50 billion, which puts the £1.5 billion package of support into context. Over recent years the Government has been accused of undervaluing the contribution the sector makes to people's lives and the economy more generally. Although the sector's umbrella bodies and leaders, in particular NCVO's Karl Wilding, have at last been heard by the Government, it seems the Government still doesn't fully understand the sector. The package is regarded as a starting point rather than a solution.

Claiming Gift Aid on tickets for cancelled events

Charities have been given specific permission by HMRC to convert ticket monies into donations and claim Gift Aid on their value, provided the event was cancelled due to Covid-19.

To take advantage of this, you must agree with each individual who purchased a ticket that the ticket value will be donated and ensure there's a Gift Aid declaration in place, as well as complying with the other requirements set out in HMRC's guidance.

If an event was postponed rather than cancelled, tickets for that event will not be eligible for this scheme.

Should charities make a serious incident report (SIR) if the crisis causes financial difficulties?

The trustees should use their judgement to consider whether an incident is significant in the context of their charity – there's  no 'one size fits all' approach. The Commission's guidance on SIRs says charities should report an adverse event, whether actual or alleged, which results in or risks significant loss of the charity's money or assets, threatens the charity's ability to operate and serve its beneficiaries, or where the charity's financial reserves or other measures are not sufficient to cover the loss. 

Where the value lost:

  • represents less than £25,000 of charity assets
  • is less than 20% of the charity's income
  • has no significant impact on the charity's services
  • and there’s no other factor which makes the incident serious

the trustees don't need to make a report. Otherwise, the trustees should consider making a report.

If you're unsure whether to make a SIR, it may be better to report than not. A charity can't be criticised for making a report where it didn't need to, but if a charity decides not to report something and the Charity Commission later becomes involved (for example if the charity becomes insolvent), the trustees will need to be able to explain why they decided not to report it at the time.  Where the Commission is satisfied that a reported serious incident is being handled appropriately, it's unlikely in most cases to take further action.

Engaging volunteers during the crisis

The huge response from the public wanting to volunteer to help with the coronavirus effort has rightly been recognised as a good-news story at a time when good news can be hard to come by. However, training and managing this surge in volunteers represents a real challenge for charities at a time when resources are already stretched.

Where necessary, adjustments can be made to normal volunteer recruitment and training practices – for example, doing induction and training online rather than in person – but charities must take care not to sacrifice essential measures required to comply with legal duties in areas such as health and safety, safeguarding, and data protection.

  • The ICO has published a blog outlining core data protection measures that charities and community groups need to put in place, read here
  • The Disclosure and Barring Service has updated its processes for carrying out criminal records checks, read here
  • NAVCA's resources hub includes links to safeguarding resources for volunteering groups, read here
  • NCVO has materials available to support charities with volunteer management, including training videos and know-how guides, read here

Charities entering into mortgages – how feasible is it at the moment?

Many charities will have to take on more debt to weather the current crisis. Charities that own land are likely to have to enter into a mortgage over that land to secure repayment of the loan or other facility. In the current circumstances many banks are very reluctant to lend, other than to long established borrowers and accurately valuing property is extremely difficult.

For charities entering into new mortgages there is an additional compliance issue arising from the ss124-126 of the Charities Act 2011. This requires charity trustees to take advice on various matters in relation to the loan including the charity's ability to repay it – clearly this is potentially challenging given the current financial situation. For further information on this read charities entering into mortgages – how feasible is it at the moment?

Briefings Charities Russell-Cooke charity law coronavirus Andrew Studd Chris Rowse