Covid-19 Impact on Charities

By Khaled Moyeed (khaled@exons.legal), Solicitor specialising in charity law and despite resolution

 

The National Council for Voluntary Organisations estimates that charities stand to lose around £4bn in 12 weeks due to the Covid-19 crisis. With charity shops closed and fundraising events cancelled, it is feared that many charities may not survive this crisis. A survey by Institute of Fundraising has found that around half of charities expect to lose around half of their voluntary income during this crisis. Muslim charities, in particular will be particularly affected because Ramadan is around the corner and many of them carry out a significant proportion of their fundraising during this blessed month. 

 

In this article, I will explore what charities may want to do and how trustees are expected to continue their legal obligations during this prolonged period when normal day to day activities are suspended. I will also highlight what financial support is available from the government and other funders to support charities during this crisis. 

 

Helping with Coronavirus efforts 

 

Whether a charity can pursue a particular activity is a legal question. Charities can only carry out activities that further their objects as set out in their governing document. Broadly speaking, charities that have the following objects can engage in efforts to tackle Covid-19: alleviation of poverty, relief of the elderly, the advancement of health or the advancement of education. In total, there are 13 different charitable objects recognised in the Charities Act 2011. Trustees should carefully check their charities’ government document to ensure that they are legally permitted to assist with Coronavirus efforts. 

 

Mosques and Islamic charities would primarily be set up for the advancement of religion. They may be able to offer support as part of their pastoral work since helping those in need is a fundament tenet of the Islamic faith. It is also likely that charities may have a general object which allows them to act for any charitable purposes.

 

If a charity’s object does not allow it to carry out activities to tackle Covid-19, trustees may be able to amend their governing document. They should first be satisfied that any proposed activity is in the charity’s best interests and that they have unrestricted funds that can be allocated. Whether and how objects can be amended will be set out in the charity’s governing document. A resolution of trustees will typically be required which will have to be filed online via the Charity Commission’s website. A charitable company or a Charitable Incorporated Organisation (CIO) will require the Charity Commission’s consent to change their objects. 

 

AGMs and other meetings

 

A charity’s governing document may stipulate that trustees have to convene a minimum number of meetings in a year and that an AGM would need to be held at a specific time. A charity’s annual report and accounts are typically approved at the AGM. Because of the government’s health advice, it is currently not possible to have physical meetings. Trustees may need to cancel or postpone these critical meetings. Trustees should email the Charity Commission on filingextension@charitycommission.gov.ukif they need an extension to file their annual accounts and annual returns. They should include the charity’s name and registration number. Overall, the Charity Commission will take a flexible approach and trustees are not expected to follow procedures to the letter of the law at this time.  

 

Where possible, trustees may consider holding video and telephone meetings if that is consistent with their governing document. There is a legal authority which states that a person attending a meeting conducted via video conferencing is ‘present’ at the meeting – it is as if they were physically at the meeting. Therefore, if a governing document does not specifically rule out video meetings, trustees should be able to convene meetings via video conferencing apps. 

 

Modern governing documents should also permit telephone-only meetings. If they do not, it is the author’s view that trustees should be able to conduct meetings via telephone and make valid decisions. If anybody wants to challenge the validity of decisions made via telephone or video meetings, it is unlikely that the Charity Commission would give its consent for Court proceedings. 

 

Trustees should take this opportunity to modernise their governing documents so that decisions can be made using a range or telephone, video or online facilities. 

 

Emergency funding for charities 

 

On 8 April, the government announced a £750million package of funding to support  the work of charities during this crisis. Most of this money will be allocated in the following way: 

 

  • £370 million to small and medium sized charities, including through a grant to the National Lottery Community Fund for those in England to support charities delivering food, essential medicines and providing financial advice; and  

 

  • £360 million will be directly allocated by government departments to charities providing frontline services such as hospices, St Johns Ambulance, victim support charities, vulnerable children charities and Citizens Advice Bureaus. 

 

More details of how to access government funding will be available in the coming weeks. Charities can also access many of the measures that the Chancellor announced for businesses such as furloughing employees and claiming 80% of employees’ wages (up to £2500 per employee) through the Coronavirus Job Retention Scheme. Charities may want to consult an accountant for further information on this. 

 

The Charity Bank has set out a detailed list of other funding organisations that are providing emergency funding for charities and social sector organisations, for example, Barclays Foundation have announced a community aid package of £100 million to charities working to help people impacted by Covid-19. The full list of such funding sources can be accessed via the Charity Bank website

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