We have heard all about the impact for people, preparations that should be taken and in the budget the Government introduced funding for the NHS, support for businesses and individuals affected. But how does all of this affect the not-for-profit and charity sector?
The first question that comes to my mind is that since the public is in distress; avoiding travel, panic buying provisions and working from home, will any volunteers still attend their duties?
Many volunteers do so for the passion of the charity, and I would like to hope that where they can still help out, they will do so. But they may not be able to, either due to the risk to their own health or based on guidance for self-isolation.
As a result, will charity shops have to close, or worse still will people who rely on charities for support be let down? In general, if the activity of a charity falls and the funds that they have available fall, how will the beneficiaries of that charity be affected?
Where individuals are self-isolating on statutory sick pay, they may be forced to reconsider their disposal income and I can imagine that the donations they make to charities will be one of the first expenses to be cut back. Many charities rely on donations for their funds and will suffer.
Charities also need to consider their duties to report in this situation. Serious incident reports may be required by the Charity Commission if the charity stops all or a significant part of its work. A school closing, or all charity shops closing would likely be reportable. Cancelling a fundraising event may also be reportable depending on the impact that it will have on the charity.
A care home which is currently only taking preventative measures to protect its vulnerable residents does not yet have a requirement to report, but that could change if the residents become affected.
From the financial statements and audit perspective for charities, consideration needs to be made as to whether the charity will continue to be a going concern or if the impact of the virus may have an effect on this such that disclosure should be made. A risk assessment will also be required in the trustees’ report.
Whilst Companies House have offered a 3 month filing deadline extension for companies affected by the virus, no similar announcement has been made by the Charity Commission.
Charities should have retained reserves for their contingency, but will this be sufficient for them to weather this storm?