Impact of Covid-19 on the charity sector

We commend all those who are fundraising for, and donating to, charities during this crisis. Members of the public and businesses alike have stepped up to support this vital sector. Going forward, small and local charities will be invaluable in nurturing this community spirit; yet these are also the charities likely to face the most immediate financial pressures. It would be a perverse and highly regrettable outcome of the Covid-19 crisis if a lack of adequate support were to mean that, at this time of tremendous charitable endeavour, the nation lost the scale and diversity of organisations that makes the charity and voluntary sector so valuable to our society.

The committee is concerned at this answer from the Secretary of State, given the scale of the loss the sector is warning of, or the impact it would have on those in society who rely on charities’ support. Moreover, charities are not the same as businesses, and thus to suggest that they should be treated the same ignores the fundamental principles upon which their work is based and the nature of their contribution to society. In particular, it undermines the efforts of the many charity workers whose commitment to serving the public is demonstrated by the efforts they are making, and risks they may be taking, to assist others. Many charities and voluntary organisations perform essential work that, while not directly tackling Covid-19, underpins the fabric of our society. Losing their services in either the short term or after the country emerges from this crisis will cause untold damage to individuals and communities. It cannot be allowed to happen.

The Coronavirus Job Retention Scheme and Business Interruption Loan Schemes promptly addressed an urgent need across the economy; however, with the Government consistently referring to them as a solution for charities in financial hardship, there is a clear need to ensure such measures are suited to the particular needs of the charity and voluntary sector. To that end, we welcome the exemption for charities from the 50% trading requirement under the Business Interruption Loan Scheme. This approach indicates a willingness to flex the schemes to ensure charities can benefit; however, in the longer term, charities, like many other sectors, also need clarity about the Government’s intentions for the support schemes. We recommend that the Department for Digital, Culture, Media and Sport works with the charity sector and HM Treasury immediately to review the measures in place to support businesses, and to ensure they fully meet the needs of the charity and voluntary sector. In particular, the Government should introduce a separate Coronavirus Job Retention Scheme for charities within four weeks. The scheme should enable furloughed employees of charities to volunteer for their organisations providing appropriate safeguards are met. We also ask the Government to guarantee that six weeks’ notice will be given of the Coronavirus Job Retention Scheme ending so that charities can plan accordingly, and to phase the ending of the scheme to support any charities that are unable to return immediately to full capacity.

We welcome the £750 million of support for charities delivering frontline services and assisting vulnerable people during the Covid-19 outbreak. Difficult decisions are being taken about which charities should benefit from Government support at this time, however, as the level of financial assistance announced to date falls short of the sums the sector says it needs, the Government must not assume that the problem has been solved or that the crisis facing charities will not grow as reserves are depleted. The Department for Digital, Culture, Media and Sport must demonstrate that it is making the ongoing case to HM Treasury for the charity sector to get the support it needs. We back the charity sector’s calls for a stabilisation fund to secure the long- term financial health and organisational diversity of the sector. It also needs to be recognised that some organisations may take time to recover following the ending of the crisis and may need support beyond that point to get to a sustainable position. In addition to the support that has already been announced, the Government should establish further funding to assist charities and voluntary organisations to stay afloat throughout the Covid-19 crisis. This should be available to organisations facing financial pressures, even if they are not involved in the frontline response to Covid-19. We request that the Secretary of State updates us, preferably via an oral hearing as well as in the Government’s written response to this Report, on what progress has been made in securing additional support for charities and tailoring the business measures to them, as well as the Department’s plans for monitoring the ongoing impact of this crisis on the charity sector’s financial resilience. Given the urgency of the matter, we request that we receive this update by Friday 5 June.

Some two weeks after HM Treasury outlined £750 million of support for charities, the Secretary of State was still unable to provide sufficient detail or clarity about the eligibility criteria for allocating that funding. An announcement of support is of limited benefit if charities facing imminent closure and workforce pressures are unclear whether they are eligible or how to apply. While we recognise that the Government is working under considerable pressures to deliver support to charities at speed, we are concerned that £360 million is being allocated through conversations between Departments, rather than clear engagement with the sector. The onus should not be on individual charities to make their needs known to Departments, and there remains a lack of clarity at sector-level about how the Government is determining which charities should receive support. It seems inevitable that this lack of transparency means deserving charities will miss out on much-needed support. We urge the Department for Digital, Culture, Media and Sport and the National Lottery Community Fund to publish clear and comprehensive guidance about the criteria that will be used when allocating support, and how organisations can apply for it, without delay. Going forward, such guidance should be published to coincide with the announcement of public funding to minimise uncertainty within the sector.