Government support for charities – is it enough?

Yesterday’s announcement by the Chancellor, Rishi Sunak, of £750m of funding for the charity sector (see link: https://www.gov.uk/government/news/chancellor-sets-out-extra-750-million-coronavirus-funding-for-frontline-charities) has had a mixed reception.

It sounds like a handsome sum, and he showed an appreciation of the value of charities, but the funding is dwarfed both by the amounts promised to the private sector, and by the losses that charities are expected to suffer as a result of the coronavirus outbreak.  It has also taken rather a long time to be announced, and there is also inevitably doubt in some quarters as to how much of this money is actually new, and how much represents existing funding commitments that are now being rebadged as coronavirus support.

Out of the headline figure, £370m is to be used to support smaller local charities working with vulnerable people, and it was certainly good to see some recognition by the Government that hospices and charities working with victims of abuse are among those most severely hit by the combination of a massive drop in fundraising revenue, a sudden surge in demand for services and increased staffing costs as employees fall ill or are required to self-isolate.  Hospices are expected to receive approximately £200m of the total, which is to be distributed through the National Lottery Community Fund.

£360m is to be distributed directly by relevant government departments, and a further £20m has been guaranteed as a contribution to the National Emergencies Trust to match donations to the BBC “Big Night In” on 23 April, when BBC Children in Need is joining forces with Comic Relief for what the Children in Need CEO Simon Antrobus describes as a “chance for everyone to (virtually) get together to celebrate the kindness and heroism of those making a real difference in their communities, and to support people across the UK who need our help now more than ever”.

Sunak was willing to admit in his announcement that there is no way the Government can make good the losses that the sector is suffering.  He pointed out that charities are eligible for some of the more general measures on offer, including the furlough scheme, relief from business rates and deferral of VAT payments, but these are of limited value to the sector.  There are many charities who simply cannot shut up shop for the duration of the pandemic, as they have thousands of beneficiaries relying on them for day to day support – and the Chancellor did say that “For them, shutting up shop at this moment would be to contravene their very purpose, their entire reason to exist.”

It seems highly likely that charities will continue to campaign for more extensive support for the sector, and that the impact of the pandemic on charities will become clearer over the next few weeks, as some of the really well known names in the sector are already warning that their reserves are running low – St John Ambulance told a committee of MPs considering the effect of coronavirus on charities that unless support was provided, it could run out of money by August.

Voluntary sector umbrella bodies will also maintain pressure on the Government to do more to help charities, many of whom are effectively used to deliver key services that had previously been provided by the state.  The National Council for Voluntary Organisations (NCVO) estimated last month that charities would lose £3.7bn of income over the next twelve weeks, and it is clear that if charities are unable to make ends meet, many of their beneficiaries will be looking to the state for help that it will struggle to provide.

Charities are not immediately able to access this new funding, but government departments are working to identify priority recipients for direct funding, and the National Lottery Community Fund is working on an application process.  Both streams of funding are expected to start reaching charities “in the coming weeks”.

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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.