Coronavirus (COVID-19) guidance for the charity sector
Download our FAQ sheet on Job Retention (Furlough) scheme
Coronavirus and your charity's finances-Webinar recorded 30 March 2020
The Financial Reporting Council has produced Guidance for companies on Corporate Governance and Reporting.
The Charity Commission has issued guidance for the Charity Sector.
Some thoughts on the guidance:
How do I get support to pay my charity staff?
The guidance references the Coronavirus Income Protection Scheme which is available for all employers. It allows businesses who ‘furlough’ (lay-off) staff to receive a grant of 80% of the wages. The details of exactly how the scheme would work are yet to be worked through. Whilst waiting for that detail charities should bear in mind:
- Furloughing staff still needs to follow employment law. So, unless your employment contracts have clauses that allow the charity to lay off staff, there will need to be a period and a process for consultation
- It is an ‘all or nothing’ scheme:
- Staff cannot work reduced hours and the reduction be treated as furloughing
- Staff cannot do any work at all, this includes volunteering
- There are significant cash flow risks due to the timescales involved
- Time waiting for the detail of the scheme from government
- Time spent undertaking consultation before implementing furlough
- Time from submitting the application to gaining a grant
So it is important to start planning now, particularly around the employment law aspects, whilst we await the detail.
Can I use reserves and restricted funds to help my charity through the crisis?
Broadly this advice follows what one might expect – this is an unprecedented crisis and if your charity needs to use its free reserves (or reserves it has internally designated) to stay afloat, it can. However, the rules in respect of restricted reserves and endowments remain in place. Two possibilities to consider:
- Can you approach the funders who donated the restricted funds to ask if they would be willing for the funds to be re-purposed?
- If you have historic restricted or endowment type reserves, and you are at risk of imminent insolvency and you can’t use these for general purposes, talk to the Charity Commission
When looking at reserves with restrictions on them, from a legal perspective the devil is in the detail so talk to your advisors. (Your auditors are a good place to start)
Can I cancel or postpone my charity’s AGM or other key meetings?
Can I use video, teleconferencing and the internet in place of face-to-face meetings?
Both these areas of guidance are helpful in looking at the current situation with people unable to meet.
What do I need to report to the Charity Commission?
Clearly the Charity Commission are thinking of charities reporting critical incidents. Whilst the current situation is unprecedented it is not a critical incident in and of itself. However, the impact of the crisis on your charity may lead you to need to report a critical incident e.g. lack of staff through illness puts beneficiaries at risk, imminent threat to your charity’s financial health or ability to deliver your charitable purpose. It is worth reminding yourself of the Charity Commission’s guidance on critical incident reporting.