Charities and Covid-19

This article is about the two Cs and for once, we aren’t talking about the Charity Commission. A form of ‘lockdown’ was, after some anticipation, declared in England this week. Charities’ concerns will be wide-ranging, from having insufficient keyworkers to provide services to vulnerable beneficiaries, to swiftly vanishing income streams (cancelled fundraising events and conferences; charity shops, cafes and community venues closed). Some charities will have now completely closed their doors and will be sitting tight, weathering the storm. For others, there will be a greater demand for them to keep going, yet little new income to support them with what lies ahead.

This humbling period serves as a reminder of the importance of our third sector. The effects of the pandemic might signify the biggest shift away from profit driven society in recent times. Although the next few months will be an incredibly difficult period for the sector, there might just be a glimmer of hope on the horizon. Even when we are stripped of all daily comforts (our routine, our freedom to travel and our ability to interact with each other), we are left wondering what we can do to help others. This sentiment has driven countless people to volunteer to help the NHS over the last couple of days and might lead the sector down a new and welcomed path.

We have pulled together some essential bits of information from recent developments which we think charity trustees and employees might find useful.

Government aid

The Coronavirus Business Interruption Loan Scheme will provide government-backed loans of up to £5 million to small and medium businesses, which could include charities. This Scheme is now available for applications.https://www.businesssupport.gov.uk/coronavirus-business-support/. This week the government also announced that it is considering a “package of measures” to specifically support the third sector as it faces potentially catastrophic falls – so watch this space. NCVO also announced that it is working closely with the government to develop these financial support packages. These developments might impact on a charity’s financial planning. The Commission encourages trustees to think about whether or not certain activities can be stopped or delayed when looking at financial planning, reminding charities that reserves can be spent to help cope with unexpected events such as this, but to be weary of situations where assets and funds have legal limits on their use.

Employees

The government has announced that charities will get support to help them pay wages. The scheme is eligible to all employers in the country, however small or large. Charity employers will have to contact HMRC for a grant to cover most of the wages of employees who remain on the payroll but are temporarily not working during the outbreak. More information can be found here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19

Contracts

Charities will need to consider reviewing contracts where services will no longer be deliverable. In legal terms, ‘frustration’ of a contract might arise and bring an end to a contract where circumstances do not make it possible to perform obligations in a contract. Parties should also consider ‘force majeure’ clauses in contracts, as such a clause could change the parties’ obligations if events (such as the current pandemic) occur outside of their control. We can review and provide advice on how the current situation might impact your organisation’s contracts.

Charity governance

Trustees will be meeting throughout the country this week, perhaps even on a daily basis, to make up contingency plans, or to ensure that contingency plans are in fact going to ‘plan’. It will be almost impossible to hold face-to-face meetings and so trustees should remember that they must act in line with their governing document, and that this might not allow for remote communications. The Commission advises trustees to check governing documents and make amendments themselves in respect of how meetings take place. The Commission have said that they will understand where decisions are made using phone or digital solutions, even if not allowed in the governing document, so long as such decisions are recorded.

The Commission’s guidance has been mixed in relation to continuing to report on serious incidents. They ask all charities to continue reporting in the same way using current guidelines but have not been very clear on which Covid-19 related incidents might be reportable. In the latest version of guidance, the Commission say they will continue to prioritise those incidents that place individuals at risk, or incidents that have had a significant impact on a charity’s operation.

Contact IBB’s experienced charity lawyers today

For additional information or to discuss your requirements with one of our charity law team, call us today on 03456 381381 or email charities@ibblaw.co.uk.