We recognise that the charity and not-for-profit sectors play vital roles in looking after their beneficiaries, many of whom will be particularly vulnerable during this public health crisis.
We therefore want to assure you that we are here to support you through this challenging and unprecedented time.
Your Trustees remain legally responsible during this time of crisis for your charity, including safeguarding the health and well-being of beneficiaries and staff, ensuring sustainable and effective resourcing, ensuring legal obligations are met. Below are some areas you may wish to think about.
Serious incident reporting
Charities should continue to report serious incidents as soon as possible to the Charity Commission during this time. A serious incident may arise where, for example, your significant fundraising activity for the year has been cancelled due to Covid-19, or if your charity has to stop all or a significant part of its work due to Covid-19, resulting in a significant loss of expected funds and/or insolvency concerns.
Trustees and members meetings
Over the coming weeks and months, charities be considering postponing meetings or holding them remotely. However, it may be that by postponing meetings you may not be complying with your governing document (particularly if you postpone an AGM). In those circumstances, OSCR (the regulator for charities in Scotland) has stated that it would be understanding and proportionate about that given the current public health concerns. We would expect (and certainly hope) the Charity Commission to react the same.
Holding meetings virtually is an alternative option to postponing them. The Charity Commission’s charities and meetings CC48 guidance sets out the rules for remote meetings and states that trustees may choose to conduct meetings by electronic means unless their governing document specifically prohibits it. According to case law, trustees should be able to both ‘see and hear’ each other. You may therefore want to try one of the following free or low cost internet video facilities such as Google Hangouts, Zoom or Skype
Charities that require an extension to their annual return deadline due to the pandemic should contact the Charity Commission. Contact details are here.
The Coronavirus Business Interruption Loan Scheme was announced in the recent Budget as one of the measures to support businesses that experience financial difficulties as a result of Covid-19. The Treasury has now confirmed that charities will be eligible for loans from that Scheme, provided that more than half of their income comes from trading.
Following the government’s advice on social distancing, the Institute of Fundraising and Fundraising Regulator are advising all charities to reflect seriously on whether to continue public fundraising (e.g. face to face, door to door and private site). They have advised that a thorough risk assessment be carried out, and any decision to continue public fundraising be documented and made at the most senior level. You should act responsibly and with prudence.
Closing the workplace – If during this difficult time you are considering closing down your charity for a short time, or asking staff to reduce their contracted hours, do make sure you talk with your staff as early as possible about your proposals. Unless it says in their contracts of employment, or is agreed otherwise with them, you will still need to pay your employees for this time. Employees who are laid off and are not entitled to their usual pay might be entitled to a 'statutory guarantee payment' of up to £29 a day from their employer. This is currently limited to a maximum of 5 days in any period of 3 months.
As an employer, you have the right to tell employees and workers when to take holiday if they need to. For example, you may decide to shut for a week and tell everyone they have to use their holiday entitlement. If you decide to do this, you must tell your staff at least twice as many days before as the amount of days they need people to take. For example, if they want to close for 5 days, you should tell everyone at least 10 days before.
Your commercial contracts
It is particularly important at this time, where you are providing services and/or supplying goods, to make sure your contracts include a well drafted "force majeure" clause. A force majeure clause will release you of your liability for failure to perform a contract in certain circumstances. However, there is no legal definition of force majeure; it is what the contract says it is. You will therefore need to ensure that your force majeure clauses are well drafted to give you the protection that you need and that they expressly capture pandemics. You may also wish to look at whether clauses in current contracts give you the right to exit early, if desirable.
You should also be revisiting your payment terms with new customers. In order to mitigate the risk of those customers suffering a downturn due to Covid-19, and therefore struggling to pay you, think about asking for payments upfront and including an express right in your contracts with them for you to suspend performance of services and supply of goods if you do not get paid.
We will continue to publish practical advice over the coming weeks to help ensure that you are supported as the situation develops, but please do get in touch in the meantime if you have any concerns and we will do our best to help you.