Skip to main content

Considerations for charities

The spread of Coronavirus has had an immediate and unprecedented shock on all sectors of the economy, none more so than the charitable sector.

It is estimated that the charity sector will lose some £4.3bn in the next 12-weeks with the postponement of the London Marathon and other sporting and cultural events.

On 25 March 2020, the Charities Statement of Recommended Practice Committee issued guidance. It warned that Government measures to limit the spread of the virus have: “Potential implications for charity income, expenditure and commitments, and the value of charity assets and liabilities. In some cases, the implications may be so severe as to cast doubt upon a charity’s financial sustainability.”

Below we explore some key considerations and practical guidance for charities during these uncertain times.

Annual Return

Charities which need an extension to their annual return deadline due to Coronavirus can contact the Charity Commission for England & Wales to request a delay.

Charitable funding

At present charities can only apply for Government loans if more than half of their income comes from trading activity which is likely to exclude many of those that have a mix of different income sources.

The Government has acknowledged the impact on the sector and has announced a package of funding measures amounting to £750 million for frontline charities. We still await guidance on how charities can apply for these grants. Similarly, we still await guidance on the type of charity which is regarded as a front-line charity.

However, there are some charitable foundations and other organisations that have announced that they will make funds available. These include:

  • The National Emergencies Trust (NET): The NET has launched a Coronavirus fundraising appeal to raise funds for local charities with donations managed by the Red Cross. NET will award grants and distribute money raised through local community foundations.
  • £2m London fund: London’s City Hall and City Bridge Trust have each contributed £1m to a fund for London charities affected by Coronavirus. The emergency scheme will be coordinated by London Funders and available to organisations facing immediate financial pressures and uncertainty because of the Coronavirus. Full details of the new emergency support fund and how to apply will be published shortly here.
  • National Lottery Community Fund: The National Lottery Community Fund has started working with grantees, partners, and other organisations to understand how it can support communities and the sector during COVID-19. We still await guidance on how charities can apply for the National Lottery Community Fund grant.
  • Wellcome Trust: The Gates Foundation and Wellcome Trust are each contributing up to $50m, and the Mastercard Impact Fund is committing up to $25m, to speed the development of and access to therapies. The Covid-19 Therapeutic Accelerator will coordinate research efforts and remove barriers to drug development.
  • £1m Money Saving Expert fund: Martin Lewis, the founder of Money Saving Expert, has pledged £1m to support small charities.
  • The Indigo Trust: The Indigo Trust is making £2.5m available through emergency grants to help charities respond to the Coronavirus emergency.
  • £1m John Lewis and Waitrose: The partnership has launched a £1m community support fund. Local stores will have these funds to support their local area based on the needs of the community.
  • Funding list: Ian McLintock has also put together a list of more than 50 sources of charity funding which you can find here.

Other sources of funding

Charities can also benefit from the Government’s Coronavirus Job Retention Scheme for those employees who are furloughed during this period.

There has also been some clarification on the ability of Charities to benefit from the Coronavirus Business Interruption Loan Scheme (CBILS). The British Business Bank has confirmed that registered charities do not now need to show that half their income comes from trading to be eligible for the CBILS. The updated terms and conditions now include the following note: Registered charities are exempt from the requirement that 50% of the applicant’s income must be derived from its trading activity. This is a welcome clarification from the bank as the requirement that 50% of income came from trading was a barrier for many charities being able to access the scheme.

Furthermore, any charity which is providing services which attract VAT and in a net payment position will be able to benefit from the ability to defer VAT payments for the period to 30 June 2020 until the end of the year. You can find out more about that here.

Other considerations

Charities face the same considerations in dealing with the outbreak of Coronavirus as any other business. Cash remains the lifeblood of any organisation and we draw your attention to the practical guidance found here.

New fundraising campaigns

With events and public fundraising cancelled, most charities are facing income shortages. In response, a number of charities have launched self-isolation and stay-at-home campaigns to fundraise during the Coronavirus crisis. Others should follow this example.

A few examples of these campaigns include:
Brain Tumour Research: Wear A Hat Day
British Heart Foundation: MyMarathon
Charity Make-A-Wish launches campaign for families in self-isolation
Mind virtual fundraising ideas

Charitable objects

The Charity Commission has set out the procedures needed if charities want to update their objects to be able to assist those affected by Covid-19. The guidance can be found here.

However, those charities which are companies limited by guarantee or CIOs will need to obtain Charity Commission approval before changing their objects.

Gift Aid on cancelled events

HMRC has announced a change to allow charities to claim gift aid on ticket sales if the event does not go ahead and any potential refund is donated to the charity instead. Previously, the charity had to physically refund the ticket price for the individual to re-donate.

This change applies to any ticket for a charity event which has been cancelled due to the Coronavirus emergency. However, if the charity event has been postponed and not cancelled, any tickets for that event are not eligible for the temporary changes.

In order to claim gift aid, the charity must contact the individual who previously purchased the tickets of the cancelled event and explain that they are entitled to a refund but may wish to donate the cost of the ticket to the charity.

This is a welcome change for arts charities given the constraints on their ability to operate at this time.

Contact us

If you would like to discuss any of the above or have other queries about how you can make the right decisions for the future of your business and your income, please get in touch with your usual Blick Rothenberg contact or one of the contacts to the right.

You can also visit our Coronavirus – Practical Guidance for businesses today Hub for our latest insights and sign up here to receive important Practical Guidance updates delivered directly to your inbox.

Check the impact of the Spring Budget Statement with our Tax Calculator Visit our Spring Budget Hub