Many charities are understandably very concerned about their financial position as a result of the Covid-19 pandemic, whether their services are currently overwhelmed or not. To allow charities to continue to provide services and hopefully weather the storm, here we consider a number of options that may enable you to provide stability and continuity for your beneficiaries.
USING YOUR CHARITY’S RESERVED AND RESTRICTED FUNDS
If your charity has reserves, the Charity Commission has stated that the COVID-19 pandemic could be a suitable situation in which these could be used to support your operations and charitable activities. However, trustees should identify which of the funds or assets have limits and/or restrictions on their use.
Any unrestricted funds should be considered in the first instance. If you do have restricted funds, then trustees can then consider the extent to which these restrictions may be amended or lifted in order to unlock these funds. However, we would recommend that you seek specialist advice before doing so. The Charity Commission reminds trustees that, whilst it will take a pragmatic approach to this process and any consent it may be required to give, trustees should give proper consideration to the wider and longer-term implications of using restricted or even permanently endowed funds.
FUNDING AGREEMENTS AND SUPPLY CONTRACTS
If your charity has any grant or other funding agreements in place, trustees should review whether the charity can still meet all its contractual obligations.
If you are concerned that the charity will not be able to meet its obligations, you should contact the relevant funder to explain the reason why this obligation may be missed, how your charity proposes to deal with this and whether any temporary arrangements can be made to help you meet your obligations.
The same applies to your contracts with suppliers and customers. More detailed guidance on the provisions which may apply to your contracts, implications on their enforceability, termination and limits of liability can be found in our commercial team’s recent publication here.
Many charities will have fundraising events planned for the months ahead. Trustees will need to consider whether or not to proceed, cancel, postpone or adapt such events on a case by case basis, considering all the relevant circumstances. Decisions should also be based on the latest official advice on public gatherings issued by the NHS and the Government.
Trustees must also review any insurance policies that they may have in place for event cancellation due to an unspecified notifiable disease. Consider also whether the cancellation requires a serious incident to be reported to the Charity Commission.
Many national organisations are already seeking to create coronavirus response funds that may be accessible to you, for example:
Information on the package of financial measures introduced by the Government to help organisations, including charities can be found here.
If you would like to discuss any of these issues or have any concerns relating to the legal implications for your charity, please contact Harriet Morgan.
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