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COVID-19:
Reporting for the charities sector

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COVID-19: Reporting for the charities sector

Published: 5th May 2020
Area: For the individual
Author: Vicki Simpson

The UK charities sector is highly regulated and even in ‘normal times’, trustees have a number of obligations placed on them.  Combine that with the situation that the whole country now finds itself in and it places huge pressure on charity trustees, most of whom are enthusiast volunteers.

One of the many obligations that a charity must abide by is the requirement to report ‘any significant financial loss’ to the Charity Commission.  However what does this actually mean for a charity in practice?  Is this even still relevant in the current coronavirus pandemic?

It is well documented how charities are suffering during this pandemic in many ways.  Charities that rely on visitors and their donations, such as religious organisations or venues like art galleries or museums are seeing themselves particularly hard hit, as are all non-health related charities.  If all of these charities were to report ‘significant financial loss’, the Charity Commission could easily be overrun.

It is a difficult call for charities to make, particularly as the Charity Commission is asking trustees to err on the side of caution, but generally speaking a report should be made if:

  • The charity is looking at any loss of funds or property totalling £25,000 or more; or
  • If the figure is less than £25,000, but the amount of loss is in excess of 20% of the charity’s income.

Of course during this time of change, as well as reviewing their financial positions, all charity trustees should be reviewing and planning for the future looking at how the current pandemic is affecting their own operation.  Is their ability to comply with the charitable objectives either now and in the future being jeopardised?  Staff on furlough leave, possible redundancies, the loss of premises or assets for example will all have a massive impact.

With over 168,000 charities contributing £17.1bn to the UK economy they are a hugely important part of the business landscape. Trustees are advised to discuss the position with a legal adviser and take a holistic approach as to whether the current situation poses a significant threat to the solvency of the charity. At the forefront of minds should be whether the current economic climate is enough of a significant impact upon the charity’s operations and will therefore cause serious harm to the charity’s work now or in the future.

Contact us

To discuss any of these issues or to consider more general estate planning please contact Vicki Simpson or another member of the charities team in your local office.

Shakespeare Martineau has launched a free legal helpline, with a team of experts on hand for any queries on family and private matters. We are also offering bespoke guidance on a range of other subjects, from employment and general business matters, through to director’s responsibilities, insolvency, restructuring, funding and disputes. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

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