COVID19 And Charity Trustees

Published date10 September 2020
Subject Matterorporate/Commercial Law, Charities & Non-Profits
Law FirmGilson Gray
AuthorMark Sabey

COVID-19 has had a huge impact on the charities sector. Charitable donations have fallen drastically and, with cash flow restricted, it is becoming increasingly important that charities look at other revenue streams.

The Charity Commission has confirmed in its recent guidance that charity trustees can utilise reserves for unexpected circumstances such as those currently being experienced, but these reserves will only last for so long. And their use may not be the right option when charities need to make sure they can support beneficiaries for the long term. The use of reserves is a subjective decision for the trustees and it might also be necessary for them to report any spending of reserves to the Charity Commission as a serious incident to update their charity's risk register.

It has always been the role and responsibility of charity trustees to manage their charity's finances responsibly, act with reasonable skill and care and to take advice where needed. This includes establishing what external funding opportunities are available when spending reserves or liquidating assets.

With numerous accredited lenders now providing government-backed lending, and many of these not being institutional lenders, charities now have more choice and opportunities for funding and finance than perhaps ever before. However, charity trustees should get legal advice to make sure the terms of any document are market standard and include the appropriate terminology and clauses for charities. The opportunity to borrow through a term loan or overdraft can...

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