The charity sector has a crucial role to play – in fact many different roles – in dealing with the pandemic itself as well as associated economic and social disruption. However, charities of all types urgently need clear information, communication and support from national and local government to do this effectively.
It’s extremely important that we remain calm and are led by the scientific advice and data. The UK has one of the most advanced public health systems in the world, as well as world-leading scientific, medical and epidemiological expertise. However, there are nevertheless numerous risks associated with this outbreak, which go well beyond health and social care.
Direct and indirect effects for the charity sector include: risk to volunteers both within health or social care charities and within the health service; risk of volunteers being told to stay at home, making delivery of essential charity services impossible; risk to vulnerable individuals who may have health care, medical or other essential supplies interrupted; risks to charity beneficiaries due to economic shocks – leading to for example more demand on food banks or Citizens Advice centres. These examples are obviously not exhaustive.
In addition, whatever their purposes or mission, charities themselves are at risk due to economic disruption which could negatively affect trading and fundraising income, leading to cash flow crises and potentially insolvency.
To help all charities to cope with the situation, so they can continue to serve all sections of society, we need urgent government action on the following:
1. Communication and guidance. Charities need to know who and where in government to connect with about these matters beyond the normal public health advice. For example, where charity and community groups are organising support for quarantined or vulnerable people, what are the guidelines about this so that risk to beneficiaries but also the charity is mitigated? DSC and similar second-tier or membership organisations have huge reach into the sector and can play a role disseminating and signposting helpful information.
2. Immediately establish an emergency fund to support charities at risk of insolvency because of economic disruption. Ideally this would provide light-touch grant funding but it could also supply interest free, short-term loans if the terms were permissive and the application processes were simple and quick to navigate. Similar measures in the recent Budget were related to ‘business’ and it’s still unclear whether charities are eligible. This needs to be rectified quickly.
3. Implement immediate short-term tax deferments or temporary waivers. VAT, National Insurance and other tax bills are a huge factor in cashflow crises which may contribute to charities rapidly going out of business. Charities often cannot recover VAT and they urgently need government policy proposals and clear guidance from HMRC around tax assistance. If, for example, VAT payments during the first and second quarters could be waived or spread out over a period of years this would be a significant help for many charities and social enterprises.
4. Facilitate bank overdrafts. These are ridiculously hard to obtain and keep open (the irony being if they are not used, they are often withdrawn, and the process of reinstating them can take months). Charities need government pressure (and possibly financial support) on the banks to ensure that they can access overdrafts quickly, not just SMEs and business. Again, the Budget did not really clarify this for charities.
5. Better support from the Charity Commission: So far this has been limited to a vague and very unhelpful notice telling charities they may need to report COVID19 matters as serious incidents, which was the opposite of helpful. The Commission should immediately set up a crisis hotline which is appropriately and expertly staffed to deal with charities that are facing solvency issues and imminent closure. Trustees need support, not bureaucratic box-ticking.
NCVO has produced online guidance for charities which is being regularly updated on COVID19: view it here.