Covid-19: New guidance aims to support charities in financial distress

The Charity Commission has published new “in-depth guidance” for organisations struggling financially due to Covid-19 disruption.

The new guide, found here, considers the practical steps a charity should take when facing “serious financial difficulties”.

As part of the guidance, the regulator asks charities to consider the financial implications of key decisions, such as:

  • The trade-off between reducing costs to support users in future or meeting the immediate needs of the charity’s users with the possibility that in future the charity will have to reduce its services or close entirely.
  • The ability to protect users from harm.
  • Selling assets during the crisis.
  • Borrowing against assets.
  • Decision making in line with purposes and requirements as per the charity’s governing document, and
  • lifting restrictions on assets or disposals of land.

As well as financial decision making, the guidance also highlights the importance of forecasting cash flow to identify future revenue and expenses over a range of different timescales. This will give your organisation an accurate picture of what cash is currently available and a realistic outlook on income.

This step is followed by options for minimising costs and protecting and increasing income, guidance on keeping the charity’s operations and finances under regular review, and what to do if your charity cannot continue to operate because of financial problems caused by COVID-19.

Commenting on the steps, the Charity Commission said the guidance is intended to act as a “starting point to help you identify the options to help you address the financial challenges facing your charity”.

The regulator adds that if you are not sure how to proceed, it would “always recommend that you take advice” from your independent examiner or auditor.

To access the new guidance, please click here.

For help and advice managing your charity’s finances, please get in touch with our expert team today.

Posted in Blog, Covid-19.