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NCVO: Why the furloughing scheme doesn’t work for charities

 

NCVO guide to furloughing

 

When the chancellor pledged that government will pay 80% of staff wages, the clarification that charities are eligible to use the furloughing scheme was welcome.

However, the furloughing scheme is unlikely to be helpful for many charities.

 

  • Many charities deliver services and support that can’t be stopped during the pandemic – they are needed now more than ever and have seen an increase in demand
  • For those organisations that may make use of the scheme, it is likely to be only for a proportion of their staff, since most will have a mixed portfolio of services and activities
  • Government’s guidance on how to claim through the scheme makes it clear that a furloughed employee can take part in volunteer work or training, but not for the organisation he or she previously worked for
  • The guidance also creates confusion as to the situation of a charity that receives grants from or has a contract with the public sector, since it states that organisations in receipt of public funding cannot be eligible
  • Coronavirus business interruption loans are only open to charities if over half their income comes from trading rather than grants, investments, fundraising or other sources
  • Business rates relief in England for the retail, hospitality and leisure sectors and for nurseries helps some charities, but only to a limited extent since charity rate relief is 80% anyway

 

Every Day Counts

NCVO welcome the Government’s April announcement of a £750m funding package for frontline charities during the coronavirus outbreak as an important first step.

  • This money is targeted at UK-focused charities responding to the crisis
  • £370m is due to go to small and medium-sized locally-focused charities doing most during the outbreak – such as delivering food and medicines and providing financial advice
  • £360m will be allocated by Government departments to charities providing essential services and supporting during the coronavirus crisis. Out of this total figure: up to £200m will support hospices
  • The Government also intends to match public donations to the BBC’s Big Night In charity appeal, with a minimum donation of £20m to the National Emergencies Trust.

 

Concerns

With charity shops shut and fundraising events cancelled, NCVO have estimated charities stand to lose around £4bn in 12 weeks as a result of the crisis – and that’s a conservative estimate.

£750m won’t be enough to prevent good charities around the country from closing their doors. Many of the charities that survive will look very different in a few months’ time, with severely reduced capacity to provide support that people rely on.

 

Appeal for Case Studies #EveryDayCounts

NCVO are still looking for case studies of how the crisis is affecting charities’ finances – please do feed in using this form.

And finally…

The Government’s Department of Culture, Media and Sport (DCMS) have a select committee inquiry on the impact of covid-19 on the charity sector. Organisations can submit written evidence to the committee by emailing cmscom@parliament.uk