Talking to a couple of my charity clients last week highlighted that the impact of the coronavirus (Covid-19) on charities is, as with nearly every individual and every business, ever changing.

Ensuring the health and safety of beneficiaries, volunteers, and staff is of course paramount. But in order to ensure this and ensure that charities can continue to provide their much needed and highly valued services as much as possible, it is essential that organisations continue to operate and be managed efficiently and effectively.

Whilst both charities mentioned above are well run organisations, they have seen an impact on their service delivery (whether through cancellation, postponement, or through changing the way their services are delivered).

Their income is also being affected – especially where income is generated from carrying out its activities, but also from cancellations of fundraising events (as part of social distancing measures) and declines in investment performance.

Income generation is always a key concern for charities – and this is likely to become a greater concern over the coming weeks with bills and wages to pay, and services to provide.

Therefore, here are a few key matters that charities should consider:

Communication – talk to your funders. If you have been awarded funding to carry out a particular project and that project can’t go ahead, or needs to be postponed or changed, speak to the funder about rescheduling or the changes to the project.

The charities that I have advised to do this have found their funders to be very supportive and have confirmed their commitment to the funding even if the activities are delayed.

Speaking to them now, will help to keep them onside and demonstrate that as an organisation you are still focused on what you do, and that you are looking at mid-longer term service delivery, as well as adapting to the current circumstances.

Revisit forecasts and plans – business plans and budgets are not set in stone. They are living documents that should be reviewed and revised as circumstances change.

Review planned activities – can they still go ahead? Are they fully funded? If not, is funding available?

Update forecasts and especially cash flow projections. It may be difficult to predict cash flow over the next few months but doing this as accurately as possible will help to identify pinch points.

Build in ‘what if?’ scenario planning into the revised forecasts – if one project doesn’t go ahead, can the funding be used elsewhere (remember, speak to your funders), or can valuable resources be saved by delaying or cancelling non-essential activities??

Don’t be afraid to say no to income – this may sound strange, but don’t blindly chase and accept income without thoroughly understanding what it is for and where it is coming from. It is essential to stay calm and not make knee-jerk reactions – decisions should be taken after careful and thorough consideration of the circumstances.

Things to consider are:

  • Would accepting this income require us to do new services/activities that we don’t currently provide?
  • If so, are these still in line with our charitable objects?
  • Would we have to adhere to new regulations?
  • Would this require us to incur additional costs?
  • Are there potential reputational risks from working with this funder? Or potential conflicts of interest with other existing funders?

Review your reserves policy – there is both a short and longer-term element to this. In the short-term, reviewing your levels of reserves is an essential part of revising plans and forecasts. Going forward, a full review of the reserves policy is recommended to see whether it is still appropriate, especially if your activities and ways of carrying them out have changed.

Also, don’t be afraid to use reserves in this period – it is why they are held.

One other recommendation is to keep notes of everything that you do differently now for future – this will help with future crisis planning and highlight areas where systems/procedures may need improving. For example, do IT systems need improving to work from home? Would moving to the cloud enable better business continuity? Has this highlighted how reliant an organisation is on particular key members of staff or income streams? Does it show how easily or how difficult it was to change delivery of services and ways of working?

The temptation at present may be to operate on a day-to-day basis, but doing as much planning and preparation as possible, will help you during this time.

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Martin Bailey - Partner

E: mbailey@goodmanjones.com

T +44 (0)20 7874 8877

I have particular expertise in the charity and the social business sector, working with organisations in 'The Third Sector' since joining the profession and developing vast knowledge and extensive experience in this time.

Charities are unique and have specialised reporting, compliance, and governance requirements. They require someone with specialist skills and knowledge to support them, allowing them to focus on their important work.

I work with organisations rather than for them, providing support and advice to issues as they arise - whether that be core accounts and audit compliance, VAT and taxation planning, governance issues, risk management, strategic reviews and advice, or designing accounting systems.

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