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Overview of Sector

November 2020

The national Covid-19 lockdown began nearly eight months ago (23 March 2020). Since 5 November 2020, the UK has again been living under a national Covid-19 lockdown. This month we offer an overview of the charity sector and the impact that Covid-19 has had on it.

Negative impact of Covid-19 on charities

Charities have battled on throughout 2020 but many have experienced significant negative direct or indirect effects of Covid-19. Some of the more common effects (which your charity may well have experienced) are:

· increased demand for your services;

· practical difficulties arising from Covid-19 safety issues which hinder delivery of services by or to the charity;

· staff/volunteer shortages;

· increased financial pressure due to loss of fundraising income, in many cases across several income streams at once;

· inability to reduce or shed overheads, or perhaps some increased costs; and

· loss of donations due to increased charity fraud.

Undoubtedly a substantial number of charities have been or will be forced to close due to Covid, whether for financial or operational reasons. Others will continue to struggle but if they cannot find any new source of income, cannot reduce their costs or achieve efficiencies, they might not survive.

Fundraising

The Charities Aid Foundation’s (“CAF”) reported in October 2020 that charity donations appeared to have risen by £800million in the first months of the pandemic, that giving between January and June 2020 was at levels usually seen in the months leading up to Christmas and that the public had donated a total of £5.4billion – £800million more than for the same period in 2019.

Some charities have gained as a result, but many charities have lost out this year in terms of the total level of donations that they have received from the public.

The level of donations which the public makes to charities over the June 2020 - May 2021 period remains to be seen, and it may be that donations will fall away, especially as households increasingly suffer financially or feel insecure.

However, on the positive side, the CAF report shows that the public has remained willing to support charities as much as it can, and that public trust in charities has risen, with 56% of people in August 2020 agreeing that most charities are trustworthy, up from an average of 50% in 2019.

If you would like to read the CAF report (“UK Giving and Covid-19”) in full, click here .

What can charities do to mitigate their problems?

The Centre for Charity Effectiveness at the Cass Business School is a leading nonprofit and philanthropy centre in the UK. In May this year it considered what charities might do to mitigate Covid-19 related problems. Its views, in summary, were as follows:

(1) Charities understandably work very hard to deliver their services, but they would need to take early action if provision of their services was to remain sustainable. That means that they would need to focus on what activities, given the impact of Covid-19, they would and would not continue to do.

(2) Whilst charity trustees needed to make early decisions about what they would either stop doing or pare down, they needed at the same time to try to protect their charity’s core activities. They would have to ensure that any reduction in activities or resources would not be so severe as to prevent flexibility or ability to restart activities.

(3) The decisions that needed to be taken might be hard to take, but that should not mean that they should be put off by trustee boards - quite the opposite.

(4) If a charity has strong governance and leadership, with a diverse board and a good mix of appropriate skills and expertise, it was more likely to make better and swifter decisions to try to deal with problems arising out of Covid 19.

(5) The Covid-19 situation had resulted in charities collaborating more than before with other organisations, and that might bring efficiencies and other benefits to many of those charities.

Some charities might be able to consider collaborative working or even possibly merging with another charity in order to reduce costs or achieve efficiencies. It might be possible to share resources. However, charity trustees should not take the decision to enter into such arrangements lightly.

CAF has produced a survival guide for charities (“Actions to Survive”). If you would like to read that CAF guide please click here.

H. M. Government has provided some COVID-19 guidance for the charity sector which you can see by clicking here .

The November 2020 Covid-19 lockdown

As before, charities are eligible for the re-introduced furlough scheme but those charities struggling with an increase in demand for their services will not be able to cope without staff. For them this will mean that the furlough scheme is of little assistance. Charities with retail shops will need to close them, another blow to income for them. Face-to-face fundraising will again have to cease for the duration of the lockdown.

New Simply Docs Charity documents

A number of new documents have been added to the Charity & Non-Profit portfolio. Some of them specifically address some Covid issues.

Apart from the new Covid 19 related documents the portfolio covers a wide range including: setting up a new charity; charity constitutions; documents and formalities needed for day to day running of a charity; trustee board meetings; trustees’ duties and formalities; charity volunteers; contracts for charities to acquire services; data protection; safeguarding; complaints; charity fundraising agreements; charity lotteries (fundraising raffles); charity grants; gift aid; legacies to charities; commercial participation and sponsorship; borrowing by charities; hire of premises and various documents relating to private members’ clubs.

We encourage you to revisit the Charity & Non-Profit portfolio - you can see it if you click here.

In these straitened times, we think you will find that these various document templates and guidance notes are a very inexpensive way of helping your charity deal with some of the legal issues it is facing.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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