Coronavirus and charities



There is no doubt that 2020 has been a very difficult year for the charity sector and one that will have ramifications for many years to come

Introduction


There is no doubt that 2020 has been a very difficult year for the charity sector and one that will have ramifications for many years to come. At a time when their services were required more than ever, many charities were facing significant income shortfalls due the cancelling of fundraising events and the closure of charity shops.

However, the sector is proving to be resilient in many ways, finding innovative ways to provide services online, fundraise and collaborate with others. Many charities are considering where they can save on costs on overheads such as office space, as they have been embracing remote working in the 'new normal'. We have seen philanthropists respond quickly and with innovation to tackle the virus, while others, crucially, have continued to advance initiatives despite the change in circumstances.

The generosity and commitment of those in working and volunteering in the charity sector and in wider society have played a huge part in the response to the pandemic so far and we are certain that will continue.

Impact on the sector

It is impossible to understand the full scale of the impact on the charity sector at this stage, particularly given the delay in reporting and filing of annual accounts. The repercussions of 2020 and the continuing lockdown will certainly be with us for some time.

Government support for the charity sector

The government pledged £750 million funding for voluntary, community and social enterprise organisations in April 2020. This was the first 'sector specific' package announced by the government in response to the pandemic.

Gift Aid and cancellation of events

As a result of the pandemic, many charities have had to cancel fundraising events. In April 2020, HMRC announced a welcome temporary change to the Gift Aid rules for processing refunds, to unlock further much needed tax relief for charities.

Freeing up restricted funds

Most charities over the past year will have revisited their financial planning. We have seen some of our larger charity clients reviewing their restricted funds, to ensure that no unrestricted designated funds have been misclassified as restricted funds, and to consider whether certain restricted funds could be modified using powers in the Charities Act to widen their use.

Property and office space

Outside of the direct impact of the pandemic, there is a moment for society in economic and social recovery to pause for thought and make choices about where to go from here. These trends point to entirely new approaches to the provision of real estate. We see exciting new opportunities for the charity sector to develop new models and services. Our real estate team have put together a Future of Real Estate report, about the role of individuals and their relationship with buildings and with each other.

Charity Commision response and guidance

The Charity Commission has had to adapt to support charities in navigating the difficult and unprecedented circumstances created by the pandemic, taking a pragmatic approach to issues such as late annual return filings and producing useful guidance on coronavirus related issues.

In some good news, the Commission will receive an additional £1 million in funding from the government at a time when its services will certainly be in high demand

In response to coronavirus, by August 2020 the Commission had:

  • Answered 1,609 coronavirus related calls.
  • Registered 99 charities in response to the pandemic, with extremely quick turnaround times.
  • Received 355 serious incident reports referring to coronavirus.
  • Granted almost 2,000 Annual Return extensions.

A blog post by Commission Chief Executive in November stated 'I hope – and have indeed heard – that our flexible and pragmatic approach to regulation has been helpful to charities during this volatile period'.