COVID-19 is having an unprecedented impact across the UK (and throughout the world!) and your Trustees remain legally responsible for your charity and its governance during this time. Against this background, the Charity Commission have issued guidance on how to grapple with the sector specific issues faced by charities (available here). In this article we highlight some of the key points which charities must keep in mind while they adjust to working within the COVID-19 outbreak.
Serious incident reporting
Charities should continue to report serious incidents as soon as possible to the Charity Commission which includes incidents relating to Covid-19. A serious incident in this sphere may arise where, for example, a significant amount of your fundraising activity for the year has been cancelled, or if your charity has to stop a significant part of its work due to Covid-19, which, in turn, is likely to result in a significant loss of funds for the charity.
Charities will want to avoid meetings in person to comply with guidance on social distancing. At the same time, many charities will face deadlines for holding meetings (particularly annual general meetings or ‘AGMs’) and it may be that by postponing meetings you are not complying with your governing document (particularly if you postpone an AGM).
Holding meetings virtually is an alternative option to postponing them, however we realise this may not be feasible in the context of an AGM where your charity has a wider membership. 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. In the context of virtual meetings, case law also states that Trustees should be able to both ‘see and hear’ each other for them to be valid.
The Commission has not issued specific guidance on the issue of postponing meetings but has indicated, more generally, that “it will take a pragmatic and proportionate response” if trustees can demonstrate they are acting in good faith.
Trustees will want to ensure that they are clear as to the legal framework they face – and clearly document the basis for any decision to take a pragmatic approach to meetings and other governance matters. It will be necessary to rely on the governance records once we have returned to normality.
Fundraising and trading
The Fundraising Regulator and the Institute of Fundraising have just issued guidance advising “all charities to reflect seriously on whether to continue public fundraising (face to face, door to door and private site) due to the increased health risk to the population at large, as well as to fundraisers and volunteers.” They have also 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.
If donations have been received in relation to events that must now be returned, charities should take legal advice and the involvement of the Charity Commission may be required to permit the refund of such donations and the cancellation of an event may, in some cases, require a Serious Incident Report.
Charities may also be eligible to access the Coronavirus Business Interruption Loans recently announced by the Government, but only if over 50% of their income comes from trading, which would mean that a lot of charities dependent on other forms of fundraising would not be able to access these funds. A number of sector bodies have written to the Government, asking the Chancellor to implement emergency measures to support the sector during the pandemic.
Membership fees and access to services
Some membership charities may currently, by law or by circumstance, be restricted from providing their services, facilities and benefits to their members. Members may have paid upfront for those benefits and may be asking about total or partial refunds.
Check your terms and conditions with those members to see how this affects you. A force majeure clause may ensure you will not be liable for delivering the service during the force majeure event – this should be checked and you should also check if Covid-19 is a force majeure event. We would draw your attention to our firm’s article on commercial contracts and force majeure events which can be accessed here .
Charities that can assist
The Charity Commission’s Coronavirus guidance for charities has been updated to include the Commission’s consideration of the extent to which the charity sector can undertake activities aiming to help with the effects of the virus.
Whether or not your charity can help will depend upon your Objects, as set out in your governing document. The Commission highlights that charities with the following Objects may be able to offer support during the pandemic:-
- the relief of poverty
- the relief of need hardship or distress
- the relief of the elderly
- the advancement of education or advancement in life of young people and
- the advancement of health.
Charities with a general charitable Object of furthering any charitable purpose will also be able to act in these circumstances.
The guidance also emphasises that before starting new activities in response to the pandemic, your charity should check not just that its Objects allow this, but also that your Charity will be complying with any other restrictions, contained in your governing document such as classes of beneficiaries or geographical locations.
Lastly, the Commission explains that if a charity’s Objects do not allow it to carry out activities in response to the Coronavirus pandemic, it may be possible to change the Objects – however, this will require either an appropriate power in the governing document or in statute, or, in the absence of any such power, the permission of the Commission.
This article is not intended and should not be relied upon for legal advice. Should you wish to discuss how this applies to your charity, please contact Peter Spencer of our Charities Department on 0207 481 6381 or at firstname.lastname@example.org.