Coronavirus (COVID-19) and Government support for charities

On 8 April, Chancellor of the Exchequer, Rishi Sunak announced that charities across the UK will receive a £750 million package of support to ensure that they can continue their vital work during the Coronavirus (COVID-19) outbreak. This response is welcome. Over the last few weeks Michelmores has been contacted by numerous charities, concerned that so many of the Government’s proposals are inaccessible to them. The package will include:

• £360 million to be allocated directly from Government departments to charities providing vital services and helping vulnerable people through the current crisis. Those charities will include:

• Hospices to help increase capacity and give stability to the sector.
• St John Ambulance Association to support the NHS.
• Victims’ charities, including domestic abuse, to help with potential increase in demand for charities providing these services.
• Vulnerable children charities, so they can continue delivering services on behalf of local authorities.
• Citizens Advice to increase the number of staff providing advice during this difficult time.

The relevant Government departments are due to work on identifying priority recipients, with the aim being for charities to receive money in the coming weeks.

• £370 million for small and medium-sized charities, including through a grant to the National Lottery Community Fund to support organisations “at the heart of local communities which are making a big difference during the outbreak, including those delivering food, essential medicines and providing financial advice”. The application system for the National Lottery Community Fund grant pot is also expected to be operational within the coming weeks.
• Up to £20 million to match donations to the National Emergencies Trust as part of the BBC’s Big Night In fundraiser due to be held later this month.

We await clarification on exactly how the cash will be distributed and which charities will be eligible for support.

The Chancellor’s announcement is a response to the recently voiced charities’ call for help. At the end of March, the National Council for Voluntary Organisations (NCVO) which represents charities, predicted that the charity sector would lose £3.7 billion of income over the coming 12 weeks.

Charity chiefs have welcomed the announcement, but have deemed the package insufficient compared to real needs. Karl Wilding, chief executive of the NCVO, said that this package was “an important first step”, though it would not be enough to prevent good charities around the country from closing their doors.

Barnardo’s Chief Executive, Javed Khan, welcomed the funding, but said that it would only be a “sticking plaster”. Labour backbencher Wes Streeting said: “I am concerned that this doesn’t go nearly far enough to provide the support needed for the charity sector, which is experiencing a devastating impact on fundraising and unable to furlough staff delivering vital services” and that this would have to be the “start of a rescue package, not the total”.

Trustees should note that on 28 March the Government announced that the wrongful trading regime for distressed and insolvent companies was to be temporarily relaxed (retrospectively from 1 March). This should offer some comfort to trustees faced with difficult decisions, but other duties and certain trading offences remain in place and we would recommend that trustees continue to operate very cautiously during this period. Please see our articles on Managing Coronavirus disruption and Coronavirus and changes to the insolvency regime for further information.

If you would like to discuss any of the issues raised in this article, or have other concerns about the impact of Coronavirus, please contact Andrew White.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.