Covid-19 – what the charity sector needs to know

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The Charity Commission has published a number of important updates in response to the continuing Covid-19 pandemic – in particular, details of the £750m support package for charities announced by the Chancellor of the Exchequer on 8 April 2020. As welcome as this aid is, it is unlikely to shield the sector from the economic hardship which the pandemic will cause.

Financial support for charities during Covid-19

In the context of a UK charitable sector which has seen fundraising sources closed down indefinitely, the package looks to be a stopgap measure. Charities therefore need to think hard about the steps that they themselves need to take.

Charitable reserves exist to help charities get through unexpected events like Covid-19, and trustees should check which funds have limits on their use. If these are designated funds, then trustees are at liberty to re-designate such reserves. If, however, funds are restricted, they cannot be spent for a different purpose without the approval of the donor. 

As a last resort, a charity can apply to the Commission to have a restriction lifted, but such a step should only be taken after careful consideration of the wider and longer term effects of making such a decision on the organisation’s financial resilience and donor relationships.

Covid-19 guidance for the charity sector

The Commission has published general guidance to charities which are considering their scope for helping the effort to combat Covid-19.

As a first step, trustees should review their charity’s objectives, as set out in the governing document. Some objectives may already permit the offering of support, for example, the relief of poverty or distress. Others may be available, which allows a response to the pandemic either directly or indirectly. For example, a charity formed to advance religion may be able to offer support as part of its pastoral work; or an arts charity might help to mitigate isolation through online services. When reviewing objectives, trustees should check whether there are restrictions, for example to benefit a particular area or class of beneficiaries.

If the existing objectives do not allow a charity to provide support against the pandemic, it may be possible to amend the governing document to change them. Before taking such a step, trustees should consider carefully whether there are other charities which may be better placed to respond, and what the wider and longer-term impacts of such a change might be, including on existing beneficiaries. 

Trustees must also check whether they have the power to amend the objects or, whether the approval of the Commission will be required.

AGMs and other meetings

During the Covid-19 lockdown, charities face cancelling or postponing AGMs and other critical meetings. Good governance requires trustees to record such decisions. If it is not possible to hold an AGM and (for example) finalise the annual report and accounts, charities with an imminent filing date should contact the Commission and request a filing delay.

More generally on meetings, some charities’ governing documents allow virtual meetings through the use of telephone and video conferencing. If a charity does not have such a clause in its governing document then the Commission will not object to a virtual meeting providing the decision so to act has been recorded as evidence of good governance.