What should your charity be thinking about amid COVID-19?

It’s impossible to escape the new reality of the global Coronavirus pandemic – now officially titled COVID-19. For a large number of businesses and charities it simply cannot be business as usual. The effects of shutdowns, social distancing and pressures on the health system reach into the daily lives of all.

Some of you may be thinking what can be done to assist your charity in continuing its valuable work at this time, especially when some charitable services may be needed more than ever. How can you maintain charity output when finances and staff health may be at risk?

Unfortunately there are no easy answers to this question at the present time. However there are a few key steps below you can take to assess the current risks and try to reduce the impacts.

Before you start, you may wish to subscribe to our Content Hub to receive and be able to view guidance, support and advice in one place – our rolling summary of the Government support available is updated daily.

Risk assessment and business continuity

This is the first priority for all charities regardless of their sector. A brief risk assessment document should be produced for the board and management looking at key areas. This includes Financial risk, staff risks and risks to the activities you carry out. It also includes a look at your current business strategy and whether that now needs to be set aside in favour of a new short term plan to ride out the virus period.

All new plans will need a streamlined model for decision making – this is not a time to move slowly – but make sure all key stakeholders are involved.

Financial Risks

The first item on the finance agenda should always be cash flow. You should assess the risk to the charity over the next 6-12 months by looking firstly at the impact on incoming resources such as fundraising events, or charity activities that need to be cancelled.  Secondly assess the working capital needs of the Charity in terms of fixed costs like premises and staff, and seek out potential costs that are saved from reducing activities or events. You can also delay investment or capital purchases if not critical at the current time.

You will want to look at what the costs are of providing services over the short term – are they now going to be in high demand, such as services for the elderly or vulnerable? How will these be funded and will that income stream continue?

Ultimately the goal is to produce some cash flow models for the next 12 months for a variety of scenarios, including worst case. It’s vital to understand exactly what cash you need to keep the charity running.

Don’t be afraid to talk to key donors and funders and see what their plans are. For example a number of grant making trusts are planning to ramp up their support for charities over this difficult period. In addition, don’t make panicked moves around long term investments – you may need some to be cashed in for working capital needs but preserve your investment strategy where possible.

In addition, the Chancellor recently announced a number of additional support packages available to charities, including underwriting staff wages, and deferral of VAT payments. These measures could be a vital cash flow lifeline so make sure you factor them in. Further information is available at:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Most importantly speak to your bank, there may be ways to improve cash flow such as overdraft adjustments or changes to current borrowing. The Government has also pledged support through a number of different schemes. For smaller organisations this is through the Coronavirus Business Interruption Loan Scheme (CBILS). For larger, potentially, investment grade businesses this would be through Covid Corporate Financing Facility (CCFF) or the recently announced Coronavirus Large Business Interruption Loan Scheme (CLBILS) for those with turnovers over £45m.

Additional details on all of the governments support is available on our rolling summary. Make sure you review all of the different possibilities to get the right targeted support for your charity and avoid unnecessary delays in getting on top of things.

On the 8th April the Chancellor also announce a specific cash pot for charities worth over £750m. This funding will support frontline charities across the UK – including hospices and charities helping domestic abuse victims. Of the total £360m will be directly allocated by government departments, while £370m will go to smaller charities, including through a grant to the National Lottery Community Fund, and £60m of that will go to Scotland, Wales and Northern Ireland. This is a significant boost to charity funding and as soon as more information is available our rolling summary will have all the details.

Don’t wait too long to explore the options. In addition, keep looking at updates from the government and public funders about what help might be available – such as the governments planned grants schemes.

Staff Risks

Your staff are one of your key assets and its vital to keep them safe and well throughout this period. Consider remote working options where available, and having a specific plan of action to follow should staff fall ill. They will need contact and monitoring whether working remotely, self-isolating at home, or working on the essential frontline for activities and services.

Communication will be key to this, in a time where many staff will be anxious and worried. Consider what flexible arrangements can be made for them wherever possible.

At all times follow the key guidance from the governments public health teams. This is updated regularly:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

Activities Risks

Take a look at all of the charities main activities from a virus perspective. If an activity involves unnecessary contact or risk then think carefully – it’s always better to delay or cancel than risk the health of both staff and the service users themselves. However, charities being at the frontline may well need to continue to provide services and support through these difficult times and you need to plan how to achieve this safety for all.

Some key activities for fundraising, or larger events may be need to be cancelled. Look in detail at contracts and payments made before you cancel, and talk to venues and suppliers to see if anything can be done around refunds or cancellation penalties.

Also consider whether demand for your activities is likely to rise. Some charities may see large draws on their services if working closely in communities or with vulnerable people. In this case you may divert cash flow and resources from other activities to support the demand. But as stated above, always consider any risks to staff and service users.

Don’t forget that decisions you make now may have long term effects on the charity, not just financially, but in terms of its reputation and output.

Careful risk assessment in the short term and involvement of Trustees, management and stakeholders is undoubtedly the best way to make sure those decisions take the best possible route, rather than unintended consequences.

Governance

Finally you may need to think about practical issues like how to the organisation. What does your  governing document say about electronic communications – does it allow for telephone or video conferencing for its meetings; or for decisions to be taken by written resolutions (so the verbal meeting can be held and recorded in writing perhaps?) you may have practical issues around how to run and convene meetings and also the AGM to think about and plan Your governing document will specify how many and how often meetings should be held to help you try and manage this process.

Recent Charity Commission guidance looks at this and also considers reserves and restricted funds and how these may be used. An aspect of the financial risk, cash flow and scenario planning referred to above will be about spending reserves and the Charity Commission guidance implies this could be an instance where these would be appropriately applied:

https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-the-charity-sector

Above all, stay safe and well.

This article was written by Charity Specialist Michael Cooper-Davis. If you have any questions regarding this article you can contact Michael using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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