The DCMS Select Committee has published its report on the impact of Covid-19 on charities and voluntary organisations.
The findings include:
The National Council for Voluntary Organisations (NCVO) estimates that charities will lose approximately £4 billion in projected income in the three months from March 2020.5 This is because social distancing measures have resulted in an immediate loss of two key sources of income for many: fundraising and trading. Many charities are taking difficult decisions to address these financial pressures, including drawing on their reserves. Many larger charities will be in a position to do so; however, the NCVO estimates that nearly one quarter of charities do not have any reserves at all. Even those that do, such as St John Ambulance, are cautious about depleting them too drastically, given the risk of a second peak or prolonged period of social distancing, and warn that they are finite.
Increased demand for services
The Covid-19 crisis has resulted in many charities, especially those working with vulnerable persons, facing increased demand for their services. This work looks different depending on the organisation. Some are working directly alongside public services to fight Covid-19 or assist people with medical conditions who need to shield. Other charities, while not on the medical frontline, are providing advice and support to help people deal with its wider consequences and so find their services more important than ever.
Government support for charities
The Coronavirus Job Retention Scheme and Business Interruption Loan Schemes promptly addressed an urgent need across the economy; however, with the Government consistently referring to them as a solution for charities in financial hardship, there is a clear need to ensure such measures are suited to the particular needs of the charity and voluntary sector. To that end, we welcome the exemption for charities from the 50% trading requirement under the Business Interruption Loan Scheme. This approach indicates a willingness to flex the schemes to ensure charities can benefit; however, in the longer term, charities, like many other sectors, also need clarity about the Government’s intentions for the support schemes.
It is recommended that the Department for Digital, Culture, Media and Sport works with the charity sector and HM Treasury immediately to review the measures in place to support businesses, and to ensure they fully meet the needs of the charity and voluntary sector. In particular, the Government should introduce a separate Coronavirus Job Retention Scheme for charities within four weeks. The scheme should enable furloughed employees of charities to volunteer for their organisations providing appropriate safeguards are met. It is also asking the Government to guarantee that six weeks’ notice will be given of the Coronavirus Job Retention Scheme ending so that charities can plan accordingly, and to phase the ending of the scheme to support any charities that are unable to return immediately to full capacity
In summary, the main calls from the committee are:
- Increase the support available to charities through a comprehensive stabilisation fund and ensure that support is made available to charities that are not directly working on tackling Covid-19 but facing financial hardship.
- Quickly (within 4 weeks) adapt existing support schemes for businesses to ensure they provide appropriate support for the charity sector – they suggest a separate Coronavirus Job Retention Scheme for charities
- Update the committee on the progress made in securing additional support for charities and tailoring the business measures to them, as well as the Department’s plans for monitoring the ongoing impact of this crisis on the charity sector’s financial resilience, by 5 June
- Publish clear and comprehensive guidance about the criteria that will be used when allocating the £360 million through the National Lottery Community Fund and how organisations can apply for it, without delay.