Amid the economic and social disruption being caused by the coronavirus (COVID-19) outbreak, the Charity Commission has helpfully produced some guidance to assist trustees with good charity governance during these uncertain times.
The guidance has focused on the following issues.
Postponement of key meetings and use of technology to replace face-to-face meetings
Given the measures introduced by the government, many charities have had to postpone key meetings. As a matter of good governance, trustees should make a record of their decision to postpone. Finalised annual reports and accounts are still expected to be filed on time, however, where this not possible due to the cancellation or postponement of AGMs, trustees should contact the Charity Commission to seek further advice.
Trustees should consult their governing documents to check whether meetings held on technological platforms are valid or not. In the event the governing documents do not permit such meetings, the Charity Commission has taken a view that they will ‘understand’ instances whereby trustees have had to use digital solutions. Nonetheless, the trustees’ decision to hold a meeting this way should be recorded.
Use of reserve and restricted funds to get through the COVID-19 crisis
Trustees should consider what their short, medium and longer term priorities are, and see if they need to amend their financial planning given their current situation. Charity expenditure, where possible, should be cut back to only essential spending. ‘Reserves’ can be spent to help cope with the current COVID-19 crisis but careful attention should be paid to restricted funds.
Charities should identify which funds have limits on their usage, where these limits have been imposed for internal purposes they could be re-prioritised. However, if the funds are ‘restricted funds,’ then they may only be used for their particular and defined purpose. In some instances there may be ways to amend restrictions, but accessing or releasing restricted funds should only be considered as a last resort. Prior to releasing restricted funds, the Charity Commission urges trustees to consider the long term impacts of making such a decision on the charity’s finances and its donor relationships. Professional advice should also be sought by charities wishing to amend any restricted funding.
Can your charity assist with the COVID-19 crisis?
In the first instance charities should consult their charitable objects. The Charity Commission has explicitly stated that charities with the objects of relief of poverty; hardship; distress and the elderly; or the advancement education or advancement in life of young people; and health will be in a position to offer COVID-19 crisis support. Trustees of charities with other objects may also be able to adapt and respond to COVID-19 either directly or indirectly, if for example it has general charitable purposes objects or objects that allow it to support the general benefit of a local area.
Charities should also consider if any of their existing charitable objects impose restrictions on their ability to act. If such restrictions exist, amendments to charitable objects may be possible through powers vested in the trustees or with the Charity Commission’s permission. The Commission has said that it will prioritise such amendments in response to the COVID-19 crisis.
When assessing whether or not to amend a charity’s governing documents, the following should be carefully considered:
(i) whether there are other charities that may be better placed to respond than yours and;
(ii) the wider and longer-term impacts if you use your charity’s money for purposes other than those for which it was raised.
What needs to be reported to the Charity Commission
Trustees are still expected to continue to report serious incidents using the current guidelines. Trustees are to use their judgment in deciding whether an incident is significant in the context of their charity and should be reported to the Charity Commission.
Support for paying staff
Charitable and non-profit employers are eligible for the HMRC grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the COVID-19 outbreak.
Now more than ever, the Charity Commission appreciates that people will want to help others during the COVID-19 crisis. However, the Charity Commission has advised that it is critical that charities protect and safeguard their beneficiaries, volunteers and staff. As such, charities should review the safeguarding guidance to ensure they are well placed to do so.
David Scott, head of our Charities Group, welcomed the guidance. He said: “The Charity Commission’s choice to adopt a pragmatic approach to governance will help reduce some, but by no means all, of the pressure faced by charities in this incredibly difficult time. We look forward to further Commission guidance in the coming weeks and months.”