On 28 May 2020, Niamh Callaghan, Partner in our Charities & Not-for-Profit team, participated in a webinar for charity leaders and trustees, which provided guidance on how best to manage some of the many challenges affecting the charity sector as a result of COVID-19.
The speakers were:
- Helen Martin, Chief Executive, Charities Regulator
- Niamh Callaghan, Partner, Mason Hayes & Curran LLP
- Liz Hughes, CEO, Charities Institute of Ireland
- Aisling Fitzgerald, Assurance Director, PwC
- And the webinar was chaired by Teresa McColgan, Partner, PwC
If you participated in the webinar, we hope you found it of benefit. Please click on the questions below that the chair asked Niamh - we have provided greater detail on the subjects Niamh touched on within the time constraints of the webinar. This will hopefully be of interest to those who were unable to participate and will serve as a reminder to those of you who participated, virtually, of course.
Many charities have expressed a concern regarding how they can continue to govern effectively in the current climate. Do you have any advice for them?
The result of the financial impact of COVID-19 on charities will of course be very severe. What restructuring options are there out there for charities who are facing “going concern” challenges?
What advice do you have for trustees on how they can best support their charities at this time and is there anything our charities might learn from COVID-19?
1. Many charities have expressed a concern regarding how they can continue to govern effectively in the current climate. Do you have any advice for them?
Should charities continue to be governed?
Most charities are more challenged now than ever, with concern for employees, volunteers and service users, reduction in fundraising, cancellation of events and a huge increase in demand for services. Added to this, volunteers, staff and trustees may now be operating and working remotely. All of these changed circumstances lead to increased pressure and challenges, and with that comes a greater than ever need for governance and governing of charities.
So, the starting point is that our charities have an increased need to be governed.
Who is responsible to govern?
Then we need to remind ourselves who in a charity is responsible for governing – and it is the charity trustees – they exercise control over, and are legally responsible for, the assets, management and control of a charity. It is they who need to act quickly and decisively in these challenging times. The suggestion that “our governing instrument says we meet 4 times a year and our next meeting is not until September”, is not good enough. Charity trustees need to hold as many meetings as are necessary for the proper governance of the organisation. So, my message is that this is a time for charity trustees to rise to the occasion, and definitely not a time to put our heads in the sand.
Most charities have paid members of staff who run the charity and deliver on the operational side on behalf of the charity trustees. The key term there is “on behalf of” the charity trustees. While the charity trustees can and should delegate tasks to others, they need to ensure in these times (as always) that those to whom they are delegating tasks to are capable of carrying out those tasks, and that the appropriate policies and procedures are in place relating to the delegation. Responsibility remains with the charity trustees.
So, the first step that the charity trustees have to take, in order to govern, is TO MEET without delay.
How to “meet”?
Obviously, the term “to meet” needs some consideration in these times, but I stress, it should not be a reason for inactivity – at the end of this crisis, and hopefully it will come to some sort of an end, how can a charity trustee show that he or she fulfilled their duty to “act in the best interests of the charity” and to “manage the charity’s resources responsibly” if they have not held a meeting, discussed the issues, decided on a path way through this and recorded that decision?
That would be a tough one to overcome if you put your head in the sand.
As charity trustees are currently restricted from being physically present to hold meetings, there are two main options:
- Charity trustees must consult their governing instrument to ascertain what provisions it holds for video conferencing or other electronic arrangements (virtual meetings) or meetings by telephone
- Meetings could be replaced by written resolutions, if provided for in the governing instrument
It is important to check the constitution/ governing instrument of your charity to determine whether virtual meetings of the charity trustees are permitted. For instance, if we in Mason Hayes & Curran LLP are establishing a new charity, that is a company, the clause we insert in the articles of association allows for a meeting of the directors (who are the charity trustees) to be called once “reasonable” notice is given; directors can participate in a meeting by way of “conference or other telecommunication facility” in different places, and they will be deemed present, they are entitled to vote and be counted in a quorum OR they can circulate a written resolution and it can work just as effectively if signed by all of the directors. So, in that instance, there is no reason for the charity trustees not to “meet” and most modern, well drafted governing instruments will allow for this.
If your charity is established as a company, and your articles of association are silent on how the directors should meet, then s160 of the Companies Act 2014 permits the charity trustees/directors to regulate their meetings “as they see fit” and s161 provides for telephonic and other electronic attendance.
If, and it would be unusual, your charity is established as a company, and your articles of association specifically prohibit anything other than meeting in person, then you need to consider how to overcome this – please do not use this as a reason not to govern – the decision taken at such an “invalid” meeting can be addressed at the next properly convened meeting of the board, and the decisions taken should be ratified at the subsequent properly convened meeting. Note that to amend your memorandum and articles of association does require a resolution of the members, and does require (in normal times) the prior approval of the Charities Regulatory Authority (“CRA”). The CRA has stated that where a governing document is silent on virtual meetings, they do not believe this should be an issue given the current situation and public health considerations, and that changes to the governing instrument to facilitate virtual meetings does not require their prior consent at this time.
So, where charity trustees decide to meet virtually:
- It is important that this decision is recorded
- For a virtual meeting to be effective, each participant must see and be seen and hear and be heard
- Provisions relating to advance notice of the meeting and quorum should continue to be observed or if not, explained why not
- A record should be taken of all those present and those in favour or against whatever resolutions are proposed. Proper minutes of the meeting should be kept, particularly noting decisions made.
For trusts and unincorporated associations, there is no implied power to hold a meeting by video or telephone conferencing if it is not specified in the governing instrument. The attitude of the CRA allowing virtual meetings in the circumstances, as stated above, is important in this regard.
If it is subsequently found that virtual meetings of charity trustees were prohibited or, in the case of trusts and unincorporated associations, the governing instrument is silent, but virtual meetings have been carried out, the charity trustees may have the option to ratify the decisions made at the virtual meeting, at a later date during a properly convened meeting. It is therefore imperative that very accurate minutes of the virtual meeting are taken and more detail, rather than less, is recorded regarding the decisions reached and how they were reached.
A CLG can pass unanimous written resolutions of its directors, i.e. the charity trustees, instead of holding a physical meeting, unless this is prohibited in its constitution.
Meeting of Members/AGMs/EGMs
Many charities are currently encountering difficulties in arranging their annual general meeting of their members (“AGM”). Under company law, an AGM must be held at a physical location with a quorum present under Section 176(4) of the Companies Act 2014. For a general meeting of members to be quorate, often a governing instrument will state that a certain number of members are required to be present either “in person” or “in person or by proxy” at the general meeting. It is important to check this point. While a physical location for the meeting is a necessity under company law for a general meeting, sometimes workarounds are possible. For instance, while a physical location may be designated for the meeting, a proportion of the members could stil attend the meeting virtually, depending on what your governing instrument says. If the quorum requires presence “in person or by proxy”, it should be possible to convene quorate general meetings for charities with a small membership where proxy voting can be encouraged with relative ease by appointing a single person as proxy for more than one member. The location of this person will be the “physical” location of the meeting. It is important to make sure that your governing instrument permits the appointment of proxies.For charities that are established with a large number of members, the convening and holding of general meetings can prove difficult at this time. We can advise such charities on a range of considerations and recommendations, which include deferring the meeting; dealing with it by written resolution if possible; or if the general meeting must be held virtually ensuring certain measures have been put in place to best cater for this, such as drafting the “Notice of AGM” in a specific way which can help to “fix” certain issues. If postponing an AGM, note that not more than 15 months may lapse between AGMs and an AGM must be held in each calendar year.
Trustees of charitable trusts and unincorporated associations may have the option of passing a written resolution by all trustees in lieu of meeting, if this is provided for in the governing instrument.
For good governance, trustees should give due consideration to the matters referred to in a written resolution and engage in active discussion on those matters with the other trustees. Options with regards to passing written resolutions by email are becoming increasingly topical in the current circumstances.
When Charity Trustees “meet” – what should they consider?
Many charities have already adopted good practice in terms of circulating agenda items and pre-reading materials in advance of meetings, taking minutes of the meetings and obtaining approval of the minutes within an appropriate time. In challenging situations like that which we are currently in, these good practices must continue - charity trustees must have the facts necessary to make informed decisions so that those decisions are made in the best interests of the charity. It is key that these good practices continue, and especially when decisions are being made in stressful circumstances, such as now, charity trustees should remain mindful of the good practices and their duties regarding conflicts of interest and private benefit. These fundamental principles of charity governance should not be forgotten.
In the current times, the issues we are aware of as being most relevant to our charity clients for consideration by their charity trustees are as follows:
- The current financial position of the charity – all charity trustees should have the financial detail they need and this needs to be updated on a very regular basis
- Consider if a charity's reserves, designated funds, or endowment funds can be accessed – click here for our previous update on Reserves
- Understanding what Government schemes / assistance are available and should be availed of, to include:
- Temporary Wage Subsidy Scheme – click here to read our Update on the TWSS
- Unemployment payment
- Supports to charities that are SMEs and small mid cap enterprises and micro enterprises
- Financial support for nursing homes
- National lottery funding
- Arts Council funding commitments
- The Philanthropy Fund – due to close today
- The Stability Fund – now closed
- The need to engage with their banks/lenders regarding rescheduling of loan repayments over a longer time scale
- Important to be conscious of any contracts in place and how any of these might be cancelled or can certain commitments be put into “hibernation” – this is when good governance in the past assists as all contracts will be easily accessible so that the T&Cs can be reviewed
- Key to be aware of all filings to be made, how to meet those filing deadlines and what is needed to achieve this
- Adoption of the Governance Code should remain a key priority
- Communication is key – with funders/bankers/employees/emergency appeals
- Need to meet more often to keep finances under review
- Important to discuss the ability to “go digital” or online with fundraising – important to be aware of the Fundraising Guidelines issued by the CRA, and the work of CII in this regard
- Important to consider data protection if you are a charity involved in gathering information with a view to researching the spread of the Coronavirus
- Important to consider COVID-19 related fraud and how better to protect your charity from harm. Should your charity be the subject of such fraud, remember your potential obligations under s59 of the Charities Act 2009 to notify the CRA
- Important to have a “back to work plan” if that is relevant to your charity – note health and safety concerns and what you can and cannot ask members of staff
Click here to access our COVID-19 Safe Zone where our colleagues in other departments have provided lots of advice on certain of the above topics, that while not addressed to charities alone, are of general benefit and interest to charities.
The continued and increased importance of implementing the Governance Code
If the experience of COVID-19 has taught us anything it is the need to be well organised and governed, to have systems in place that continue to work despite being cast into the middle of a pandemic. If we were 3 or 4 years into compliance with the Governance Code, certain charities may be better placed to deal with the impact of COVID-19.
While we are all under pressure at the minute, and the Governance Code demands a lot of time and effort, I would strongly recommend that your charity continues with its work in implementing this Code during 2020 as it will assist in the decision making process that COVID-19 has foisted on us all, and it remains an obligation from the CRA.
We previously circulated various ezines advising you on different aspects of and how to adopt the Governance Code. We are already working with a number of you, assisting you in your efforts in this regard. Further information on the Governance Code and how your charity should respond to it is available here. The CRA has published a number of guidance documents and templates designed to help charity trustees effectively implement the Governance Code. These include practical advice and tips on: minute taking at board meetings; leading a charity; charity trustee duties and roles; risk management; and recruitment and induction. These are explained in further detail in a previous article available here.
How can Mason Hayes & Curran LLP assist my charity with compliance?
Some charities are managing to work through the Governance Code without the need for any legal assistance. Others have sought our team’s assistance in drafting documents that they need as “evidence” of compliance, and others have asked that we work closely with them in every aspect of the Governance Code. The exercise of reviewing the principles and standards set out in the Code is giving many charities cause to review their governance structures and governing instruments, to ensure they are fit for purpose and reflect best practice.
Many charities are availing of our bespoke charity trustee governance clinics/induction training seminars as a way of understanding the increased regulatory environment in which they are now operating and the tasks they therefore need to address throughout 2020 and beyond. Charity trustee induction is a key requirement of the core principle of “working effectively”.
When providing these governance clinics to some of our clients, as well as advising on their charity law compliance requirements, we have advised on additional “governance” related matters such as property holding nominee companies, merging, restructuring and winding up, and the actual provisions of an organisation’s governing instrument.
The purpose of the Governance Code is to improve transparency and to promote best practice in governance with a view to building and maintaining public trust and confidence for all registered charities. Whatever way you propose to implement the Governance Code, now might be a time to give it some thought and take action. We are here to help if and when needed.
2. The result of the financial impact of COVID-19 on charities will of course be very severe. What restructuring options are there out there for charities who are facing “going concern” challenges?
The financial position of many charities has changed rapidly in the current environment, with the requirement to cancel events and traditional fundraising methods obliterated for most. It is even more important in these circumstances for charity trustees to hold regular meetings and exercise good governance over their charity. Charity trustees should have frequent updates on the financial position of the charity, to include income, expenditure, assets and liabilities. As already noted in greater detail in response to question 1, charity trustees should also assess what steps they can take to minimise expenditure, whether that is to cancel or postpone payment obligations where appropriate, look at benefits under existing insurance policies, or to speak to their bank about funding or supporting cash-flow. In addition to wage supports, there are a range of government funding supports available and further information is set out here.
Restructuring is going to be inevitable for many charities as a result of the financial impact and changed circumstances that COVID-19 has sent out way.
In terms of restructuring options that might be available to deal with the change in the financial position and commercial circumstances of your charity, the charity trustees need to consider if they are dealing with a solvent or potentially insolvent situation as that will direct their conversation as regards options.
If the charity is unable to survive as a going concern, if it cannot meet its payment obligations as they fall due, then the charity is facing insolvency and the charity trustees need to take immediate steps.
One word of warning for charities when determining if they are insolvent – you need to be careful of restricted funds. If I look at the balance sheet of a charity, it may look extremely healthy, but if I investigate further a very large portion of that balance sheet might be subject to a restriction and cannot be used to meet day to day liabilities. If you take the restricted fund out of the balance sheet, it might be a very different picture and the charity might in fact be facing insolvency. Be careful of this. Please click here to read our ezine on restricted funds.
If your charity is in an insolvent position, or it is going in that direction, it is key that charity trustees who are in that situation take professional legal advice. It is likely, if your charity is a company, that your advisors will advise that the company enter a liquidation process, most likely a creditors' liquidation, but there are other options. The charity trustees need to be advised of the risks of fraudulent and wrongful trading – if your charity is insolvent, then the charity trustees have to give due concern to the interests of creditors. If your charity is established as a trust or unincorporated association, it is equally necessary that you act quickly as there is potential personal liability. See a further note on these issues below.
Looking at the solvent charities
They can pay their debts as they fall due, but even at that, for most charities things are extremely difficult. It is taking huge efforts to deliver their charitable purpose and it looks unlikely that some can continue in the current manner into the future. Obviously those charities will first look at minimising costs, protecting income, where possible increasing income and will keep these finances under regular review, as noted above. As well as looking at the finances, charities are looking at restructuring options and here are some that we are currently advising clients on:
Charity trustees have more options and flexibility to manage the charity and minimise their personal liability where it remains solvent – so acting fast and setting a path through this is key.
Solvent winding up
While hopefully not something that will happen widely, steps can be taken to wind up a charity under the control of the charity trustees. The governing instrument of all charities should have a clause setting out how any remaining assets of the charity should be dealt with in those circumstances. The CRA has a good note on its website on the process to wind down a charity in these “solvent” situations. If your charity is a company, don’t forget about the additional need to dissolve the company – take professional advice on the difference between voluntary strike off or members' voluntary liquidation. For trusts, where no procedure is provided for, an application may be made (a) to the CRA for a cy-pres application or to approve a merger with another charity (or the procedure set out the CRA guidance may be relevant) or (b) to Court for directions on termination of the trust. For unincorporated associations, where no procedure is provided for, a) the members may agree a procedure or b) application may be made to the CRA for a cy-pres application or a merger with another charity, (or the procedure set out the CRA may be relevant) or c) application may be made to Court by a majority of the members to terminate the association or the Court itself may make an order to terminate the charity on evidence that the association can no longer properly function. This applies to solvent or insolvent associations. The courts are likely to ask for the views of the CRA. The CRA and where relevant, the Revenue Commissioners, must be notified of the winding up of the charity and final accounts filed. The CRA will then arrange for the charity to be deregistered. Charities must retain accounting books and records for at least 6 years after winding up.
Possible Mergers or Restructurings
One of the ways of increasing efficiency and effectiveness might be by merging with another, similar charity. However, merging is not the only option. There are numerous ways of obtaining economies of scale, sharing resources, collaborating or other joint arrangements which may allow your charitable purpose to continue, protect your staff, your mission and continue to serve your beneficiaries.
Clients often ask “where do we start in considering a merger or collaboration?” Our advice is to identify suitable partners and then consider what might be the best option for working in partnership with that entity? What would the end result look like? And most importantly what charitable purpose would we continue to deliver and how would that improve on what we are currently doing?
We set out some considerations below in relation to collaborating with other charities. Once you have decided what method of collaboration works best for your charity, we can assist you to put the legal structures in place to facilitate and support that collaboration and ensure its effectiveness going forward.
Have you considered whether there are any charities which carry out a similar mission to yours, with which your charity could merge? A merger can lead to a number of benefits for the merging charities, including:
- Increased efficiencies, by obtaining economies of scale and associated cost reductions
- Improved resources, by sharing staff competencies, skills, intellectual property and equipment
- A revised strategic direction. Often, a merger can spur charity trustees to re-think their strategic plans for the next five years, ensuring a mission-focused approach, while incorporating increased efficiencies and innovations from shared resources
- Improved access to funding - Instead of competing for resources, would it be beneficial to approach funders and the public with a shared mission and single vision?
There are many ways by which a merger between two or more charities can be effected. The first step is to ensure that the governing instrument of each charity permits a merger, in whatever form that merger might take. The second step is to inform the CRA, as required by their guidance document on winding up a charity. Once those two steps have been taken, a merger can be effected in a number of ways, including:
- Transfer of assets by agreement: a legal agreement is entered into by two or more charities which specifies all of the assets, liabilities and activities that will transfer. The “successor charity” can be one of the existing charities, or a brand new charity. The remaining charities are wound down
- Transfer under the Companies Act 2014: the Companies Act 2014 contains several statutory processes to facilitate a merger between charities that are limited companies
- Change of membership: one charity can take over the management and control of another charity by taking over its membership and directorship. Both charities remain in existence, but one effectively becomes a subsidiary of the other
- Merger pursuant to the Charities Acts 1961 or 1973: the 1961 and 1973 Acts contain various methods by which charities can merge their activities and assets
Further detail in relation to the considerations when merging two or more charities is contained here.
Funding a merger
If your charity is contemplating a merger, you may wish to consider applying for funding that is available from the Community Foundation of Ireland. A grant of up to €8,000 is available to assist organisations with the early-stage discussions and negotiations relating to a potential merger. The grant is intended to “pay for associated costs such as hiring an external facilitator, room hire, travel costs etc.”. Further detail is available here.
B. Shared services
For many charities, and particularly those with a distinctive mission, merging may not be a suitable or desired option. Sometimes merging two or more charities can be complicated and can take some time to do. In the current environment not all charities have this time with financial and other challenges coming quickly down the line. Many of the benefits of merging with another organisation, including obtaining efficiencies and sharing resources, can be obtained by entering into a “shared services agreement” with another charity. One thing that COVID-19 has taught us, whether we like it or not, is that we don’t all need to be sitting in large office spaces at the same time, or even at all. If your charity had a significant property asset that you operate from, with perhaps a significant rent, is this an asset you could do without/share with others? Charity trustees should be considering potential opportunities in this regard.
A shared services agreement is a legal contract in which two or more charities agree to share certain assets or services. Examples of assets that could be shared are office space, stationary, specialised equipment or furniture. Alternatively, charities could share services, including cleaning services, IT support and maintenance or catering. Often, employees are shared between charities and spend part of their time working for one and part for the other.
It is important that terms relating to how services or assets will be shared, including what the cost arrangements will be and for how long the sharing arrangement will last, are set out within the legal agreement.
We regularly assist charities to prepare shared services agreements and would be happy to discuss this with your charity if you think it might be of benefit.
C. Ad hoc alliances
Are there charities, or for-profit business, with which your charity could partner, on an ad hoc basis, to run a particular fundraising event, or provide a joint service to your beneficiaries? If so, you should consider what the responsibilities of each organisation will be and how costs / funds received will be split between the organisations. It is important to document these decisions in a legal agreement.
It is also important that members of the public understand which charities / organisations are participating in the alliance, particularly if they are donating money. Therefore, the purpose(s) to which members of the public are donating funds should be clear. The principle of donor intent should always be respected when fundraising, meaning that charities must respect the intention of the donor in deciding how to use any funds received. This is particularly important where one of the partners is a charity and the other is a for-profit enterprise.
We regularly advise charities when they are considering entering into an ad hoc partnership to run a particular event or provide a service. We would be happy to talk you through the matters that the charity trustees should be aware of.
In conclusion, there are a number of ways by which your charity can collaborate with other charities and organisations, whether by way of merger or by way of an ad hoc alliance. If you would like further guidance on the legalities of a proposed collaboration or restructure, and the considerations that the charity trustees should bear in mind at the planning and implementation phases, please let us know.
Personal liability where the charity is a trust or unincorporated association.
It is important to note that the position of charity trustees of a trust or incorporated association differs greatly from that of charity trustees (directors) of a company, with regards to personal liability for debts of the charity. Typically for an incorporated charity, to be found personally liable, the directors would have to have been engaged in reckless or fraudulent trading or found to have been at fault which led to the insolvency. For trusts, the trustees are simply personally liable in all circumstances. For unincorporated associations, typically the managing committee members or officers may be personally liable but members may attract personal liability in certain cases.
- Charitable trusts – trustees are personally liable for the debts and liabilities of the charitable trust. The trust is not a separate legal entity. Trustees may have the benefit of an indemnity from the trust in respect of their role as trustee, however, this indemnity will not be of any use if the charity is insolvent and in debt. It will not matter that the trustee was acting in good faith and in performance of his/her functions. Trustees may also be liable for the acts of other trustees, for example, where a trustee has “turned a blind eye” to the acts of the other trustees. Charity trustees may be able to rely on indemnity insurance, if this has been put in place and paid for by the charity, to cover any liability incurred by the trustees in good faith in the exercise of their duties.
- Unincorporated associations – like trusts, unincorporated associations are not separate legal entities. The terms of the governing instrument of the association are key in establishing where personal liability lies. Generally speaking, the persons controlling the association, such as those individuals who are officers or on the managing committee, may be personally liable for the debts of the association. Members may have personal liability in certain cases. Liability may be limited under the terms of the governing instrument either in principle or to a certain amount, such as unpaid dues. Any indemnity in place will be of no use if the association is insolvent as there are no assets to back up the indemnity. Charity trustees may be able to rely on indemnity insurance, if this has been put in place and paid for by the charity, to cover any liability incurred by the trustees in good faith in the exercise of their duties.
Personal liability where the charity is a company limited by guarantee
Directors of a charitable company owe a duty not to materially worsen the position of the creditors as a body. Directors are obliged to use the skill and experience they possess, in their role as director, regardless of whether they are acting as a director in a volunteer or unpaid capacity.
- Reckless trading The directors have an obligation to act honestly and not recklessly. A director is carrying on business in a reckless manner if he/she ought to have known that his/her action would cause a loss to the charity or the creditors and does not honestly believe that the charity can pay its debts. A director can be found to be personally liable for the debts of the charity in such case. While this does not mean that a charity should stop carrying on its activities when it becomes insolvent, it does require that directors pay particular attention to the positions of the creditors in order to protect their interests. It is advisable that charities in such a position obtain professional advice before making any decisions which could prejudice its creditors.
- Fraudulent trading A director carrying on business with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose can be found guilty of fraudulent trading. This is a criminal offence and renders the director liable for all or some of the debts of the charity.
- Unfair preference Directors should ensure that they do not make a payment or dispose of property in favour of a creditor with the intention to prefer that creditor over the charity’s other creditors. If the charity is subsequently wound up within 6 months and it is found that such an intention exists, the effect is to invalidate the payment or disposal. In order to avoid problems arising with this, payments to creditors when the charity is financially challenged should be carefully scrutinised to ensure that they are necessary for the continuance of the charity and professional advice should be sought where necessary.
- Protection from personal liability Directors may have the benefit of directors and officers insurance or an indemnity from the charity to protect them from personal liability in their role as directors. However, this insurance or indemnity does not cover fraud and is not likely to extend to circumstances where the director has been wilfully negligent.
3. What advice do you have for trustees on how they can best support their charities at this time and is there anything our charities might learn from COVID-19?
I have stressed in my responses to questions 1 and 2 the importance of charity trustees engaging with the charities they are responsible for governing. The impact of COVID-19 will be felt by every charity in the country. While it might vary depending in particular on the activities carried out by the charity, all charities will be stretched in some manner. All charities need the guidance, skills and experience of their charity trustees. Without a doubt those charities that are more organised will be better equipped to act quicker, put in place the systems and processes they have spent time adopting, and benefit from their planning and preparation.
In short, the charities with better governance in place will find it easier to manage their way through this. While many well governed charities might unfortunately not survive the impact of COVID-19, they will find it easier to reach that decision, to plan for the next steps and to gracefully and thoughtfully, bearing in mind their stakeholders and founders, guide the charity.
Now is a good time to consider what would have made this COVID-19 pressure more manageable and what might we learn from it. These are the issues I would recommend for your charity trustees to consider:
- Are your governing instruments fit for purpose - are there any changes that would make it easier for your charity to operate if a second wave of COVID-19 or God forbid, another pandemic were to grace our shores?
- What processes and procedures would assist in your charity operating more smoothly? What controls are in place to keep track on working from home? What delegations are in place and how are they monitored.
- Do you need to re-write or update your risk register – it is likely that the new environment has greatly increased the number of risks faced by charities.
- What fundraising is possible when events with a large number of people cannot be arranged? Are you up to date with GDPR to permit increased virtual fundraising?
- Is the financial information available to your charity trustees fit for purpose?
- Now that so many of us have become accustomed to working from home, do you need the property you have – is it a good use of charitable assets?
- Are your charity trustees really “fit for purpose” in this new demanding world? This is a difficult question but it is an important one as it is key to good management and governance of your charity.
- Do we need multiple charities catering for the same need? Might we be more effective in our delivery of services if we had more centralised well managed charities?
For more information on successfully navigating the many novel and challenging issues presented your charity by COVID-19, contact a member of our Charities & Not-for-Profit team.