Reporting and Finance in a post pandemic world.
Charities have now been delivering services for over 12 months whilst dealing with the challenges arising from the COVID-19 pandemic.
A combination of the 31 March 2021 year end along with the continued success of the UK’s vaccination program has turned the attention to year end budgeting and reporting.
Each of these areas will present their own unique challenges which charity management and trustees will need to navigate to achieve the best outcomes for their organisation and those benefiting from its’ services.
Many charities will be wrestling with budgets for the forthcoming year against a backdrop of changes in funding arising from the pandemic.
As part of the Chancellor’s budget in March the Coronavirus Job Retention Scheme has been extended until September 2020, although many charities will not have accessed this due to ongoing service provision during the pandemic.
Whilst it is reasonable to expect some funding challenges in the coming years as the UK economy recovers from the pandemic, there will be opportunities for charities to access new revenue streams in the forthcoming year. Additional funding has been announced to specifically target Domestic Abuse whilst targeted grants will also be made available for certain cultural organisations.
The UK Government has also announced a UK Community Renewal Fund as part of the ongoing Brexit separation from the EU with this being targeted at areas with the highest levels of economic hardship. The Community Ownership Fund will also provide £150m million of funding which will be of interest for charities considering Community Asset Transfers.
As a final point, the UK Government has re-confirmed its support for social enterprises in an extension to Social Investment Tax Relief (SITR). This can now be obtained from loan finance and not equity, which expands the benefit to charities and not just organisations such as Community Interest Companies.
Many charities are now well versed in the arts of virtual meetings and it is accepted that many AGM’s will continue to be held virtually throughout 2021. The Chartered Governance Institute (ICSA) has recently provided guidance on the holding of remote meetings and how these can offer both compliance and strong stakeholder engagement.
What is being reported at the AGM will obviously reflect the pandemic and, whilst there are no fundamental changes to the SORP or specific requirements, there are specific areas which should be considered by Trustees.
Going Concern will be of critical importance and it will be critical that Trustees adequately reflect how they continue to manage the finances responsibly. This may be due to difficulties faced by a lack of fundraising income or retail sales over the past 12 months, or, where strong results have been reported but funding challenges are expected in the future, how these results will be used to secure the ongoing activities of the charity.
Trustees should produce a document detailing their assessment of going concern for periodic review and reporting. It is expected that this is an area that will come under increased scrutiny from regulators, auditors, and examiners.
Trustees will also need to give due care and attention to disclosures surrounding fundraising activities. The fundraising regulator has found that 79% of charities currently do not comply with requirements in this area, notably, where charitable income exceeds £1m specific disclosure should be made in the Trustees’ Report in relation to fundraising activity.
Trustees and management should also be aware that the measures in operation during 2020-21 to reduce the reporting burden are slowly being removed. The Charity Commission will likely expect organizations to meet their statutory deadlines with less leeway given and the statutory extension previously provided to Company charities has been revoked.
Charities that continue to struggle in this area should contact their regulator or local Voluntary Services support agency for further support and direction.