COVID-19: Reporting for the charities sector
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.
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General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
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