13 May 2020

Coronavirus – Recent updates in the UK charity sector


Confirmation furloughed employees of charities will not be allowed to volunteer for their employer

Since the announcement of the Government’s coronavirus job retention scheme, there have been calls from the charity sector to exempt charities from the rule that furloughed staff cannot then volunteer for their employer. The rule means that while the furloughed employee of a charity can volunteer for other charities, it cannot volunteer for its own, and charities lose out on a valuable pool of volunteers.

However, during an online House of Lords session, the Minister for Civil Society Baroness Barran has made it clear that the rules as applicable to charities will not be relaxed. She said “In order to prevent fraudulent claims we’ve been clear that individuals can’t work or volunteer for their own organisations… this also protects individuals: if we allowed workers to volunteer for their employers, the employers could effectively ask them to work full time while only paying them 80 per cent of their wages”.

Baroness Barran also said that many charities have already taken advantage of the scheme.

Exemption for charities applying for Coronavirus Business Interruption loan scheme (‘CBILS’)

Since 23 March, through CBILS businesses have been able to apply for loans of up to £5 million, with the first 12 months interest free. However only businesses that earn more than 50 percent of their income from trading were eligible to apply, which naturally excluded many charities. However, in a welcome move, the British Business Bank which oversees the scheme has now amended the criteria to exempt charities from the requirement that 50% of income is earned through trading. It was previously confirmed that charities with trading subsidiaries will be eligible, as long as there is an inter-company guarantee from the trading entity to the charity. However, there are reports that charities continue to be turned away by lenders.

Support for small business in the form of smaller loans which should be easier to access has been introduced under the ‘Bounce Back Loan’ scheme. Loans between £2,000 and £50,000 are available and the funds should be available within days at a flat rate of interest of 2.5%. The government will provide 100% guarantee for the loans and will cover the interest for the first year.

IVAR publishes briefing on challenges faced by voluntary organisations

IVAR has published a briefing note on the challenges currently faced by voluntary, community and social enterprise organisations (VCSE) as a result of the coronavirus outbreak. The briefings are based on the discussions that take place in online peer support groups for leaders of VCSE organisations and is the third briefing IVAR has published.

The themes discussed include the demands faced by leaders of VCSE organisations in leading staff and volunteers through a period of such uncertainty. This is coupled with a sense that for many it feels futile to plan for the medium and long term, a difficulty which has been amplified by unclear communication from the government. In the short term, organisations report that they are trying to balance need (which is often increased) with the capacity to sustain services.

In terms of fundraising, many leaders have reported a positive response from their funders, whether that is being more flexible with the use of grants or dropping targets for a period of months. However the briefing also notes that there is a level of concern regarding longer term funding as funders priorities may change as a result of the crisis. Furthermore, money that has been dedicated to the emergency response may mean less for the medium and long term. Better communication from funders about their intentions is encouraged, so organisations can begin to factor this into their planning.

Never More Needed campaign

Various organisations in the charity sector have been involved in organising a publicity campaign to raise awareness of the important role charities are playing in response to the coronavirus. The hashtag was launched to coincide with the BBC’s Big Night In fundraising event. The campaign follows the #everydaycounts campaign that was launched amid calls for the government to launch a support package for the sector.

A resource page is available on the” charitycomms website in order to maintain a clear narrative for the campaign.

DCMS guidance portal

The Department for Digital, Culture, Media and Sport has published a webpage signposting various resources for those operating within the voluntary, community and social enterprise sector.

The resources are split into: guidance on ensuring business continuity; funding and fundraising advice; and guidance on volunteers, both how to volunteer safely and how to manage volunteers.

Sharp fall in legacy incomes predicted

Legacy Foresight has updated five year UK market forecasts to consider information on the economy, administrative delays and deaths as a result of COVID-19. Since they last produced a forecast at the end of March these factors have deteriorated, leading to them to forecast a sharp decline of 27% in legacy incomes over the next year. Previously, the forecasted drop was 8%.

However, this extent of a drop in legacy incomes is not expected to be long-term. Over the period 2020 to 2024, legacy income is only expected to be 5% lower than pre-coronavirus predications, with overall growth from approximately £3.2 billion in 2019 to between £3.7 billion and £3.8 billion in 2024.

Changes to the world of work and charities considering downsizing

As a result of the lockdown, charities have been required to embrace remote working, either for the first time or on a far larger scale than before. Along with businesses in other industries, many are reporting the relative success of the new arrangements and are therefore considering if they will need the same amount of office space in the future.

With property costs being one of the larger fixed costs of many charities, reducing space could translate into a significant saving. At a time when the charity sector is facing a huge loss of income, this may be an attractive cost-saving option for many charities currently assessing their long term financial viability. The property team at Withers has set out the options for those businesses that are considering downsizing their space here.

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