Dealing with the new normal

Ashlynwood took part in a webinar on the new normal organised by Charity Financials. A very special thank you to the whole team at Charity Financials for their great work in organising the webinar and ensuing it all ran smoothly on the day.

In the webinar ‘Dealing with the New Normal: Managing charity governance, operations and finance during COVID-19’ we explored some of the key challenges faced by charities in light of COVID-19, giving guidance and examples on how to work remotely and manage teams, volunteers and boards under the new operating procedures required in the “new normal”. We also heard first-hand experience from Heather Benjamin, Chair, Air Ambulances UK on how they are thriving in the new normal.

In summary, the webinar explored 4 key themes:

• Governance – Documenting COVID-19 related actions; continuity planning and AGM postponements; the role of trustees and the communication required between Boards and trustees.
• Operations – The policies, procedures, updates and amendments caused by COVID-19 and the new ways of remote working.
• Finance – Planning for the gap in fundraising through effective cash management and risk management of your charity’s assets.
• GDPR and online security – Dealing with the increased risks in online security to mitigate and overcome while working from home.

The following is a recording of the webinar.

COVID-19 impact on the sector

Research by the Chartered Institute of Fundraising suggests that charities are facing a £12.4 billion shortfall in income for the year due to impact of coronavirus.

Navigating through these exceptional times will require strong governance and a clear tone from the top. There is much published guidance available as well as an array of support schemes rolled out by the Government.

In a sense, we are all in this together and we have to raise to the challenge.

Governance

The seven principals of good governance, as set out in the Charity Governance Code, provide an excellent framework for helping deal with the new normal.

During COVID outbreak many people naturally want to help in any way possible. However, based on charity’s governing document, there may be restrictions on what the charity, can and cannot do. For example, an arts charity, may not be able to start using the charity funds to help the elderly, by delivering meals during lockdown. Sounds harsh but it is important to know and understand the charity’s remit.

Of course, a charity can look at amending its charitable objects. This can be a long process, potentially requiring members’ approval for membership charities and/or approval from charities commission.

Charity Trustees and executives should understand the consequences of changing the charitable purpose. A short-term kneejerk reaction could have long-term impact on the charity’s activities, future funding sources and beneficiaries.

Merging with other similar charities and/or partnering with commercial entities as a means of ensuing going concern could be considered.

Communication

Focus on NHS and health-based charities may overshadow other charities in terms of raising funds. Arts and cultural charities could take a bigger hit due to COVID. Thus, it is important for all charities to ensure regular communication with all its stakeholders about how your charity is adapting to the new normal. Supporters would want to know and understand how the charity plans to remain a going concern and adapt to the new normal. What services can be expected from the charity?

This may require greater frequency of communication with supports. A bi-monthly newsletter may not be adequate. Consider the medium of communication which is used. Very likely that there will be greater use of social media than ever before. How is the charity geared up to do this? Social media has many positives but also many well documented negatives. Smaller charities may not have the in-house resources to adequately use social media to get the voice heard in a crowded online environment. It is important to develop clear policies and procedures around use of social media to ensure it is effective.

Adapting

The ability of the leadership to adapt to change and react quickly to an evolving situation is very important. Having a strong team of Trustees and/or executives to bounce ideas off in a positive manner is essential.

Many charities would have seen regular service programmes came to a stop overnight due to the lockdowns imposed. For example, a community language school holding regular weekend classes saw its services stop. Converting to an online language school required a lot of detailed planning, testing, training for both teachers and students as well as the necessary IT equipment and facilitators. Documenting the process and getting appropriate consent from all parties for using online platforms also had to be undertaken. Impact of General Data Protection Regulations also kicks in as there may be newly identified data controllers and data processers.

One of the biggest potential headaches would be dealing with Trustees who have come to the end of their term during the lockdown period or holding annual general meetings.

There is a lot of published guidance on this matter, following the temporary amendment brought in via the Corporate Insolvency and Governance Act 2020. Importantly, these amendments offer a range of options for Charitable Incorporated Organisations or charitable companies. These amendments will last till 30 September 2020 but may be extended if needed. Options for unincorporated charities are not covered by the new law.

The Charity Commission has adopted a pragmatic approach, though its published guidelines, with emphasis on Charity Trustees to fully understand and act in the best interest of the charity. And, importantly to record any decisions to demonstrate good governance.

Trustee meetings themselves may be held virtually using online platforms. Getting all Trustees to adapt to this and having documented guidelines for conduct of online meetings is important. For example, for online Trustee meetings you may need an IT facilitator for technical support, someone whom may not normally attend a Trustee meeting. Ensuring they sign off confidentiality wavers would be one example of due process which needs to be followed.

Naturally many operational activities, policies and procedures may need to be revised to allow for online services, where previously, there no such provisions existed. Updating such documents should also be a component of future planning for charities.

This is not a paper exercise, but provides a good opportunity for the Charity to re-think some practices and become more agile in its operations going forward.

Operational

For many small charities there is often no consideration given to business continuity planning in normal times, and now in the COVID world this is vital.

Knowing the short, medium and longer term priorities along with financial planning for such priorities is important. In particular, identifying which projects or activities can be stopped or delayed in order to focus on essential spending only is necessary.

Reserves can be spent to help cope with unexpected events like these. Important to remember if there are restrictions on funds, in some instances there may be ways to amend these restrictions. However, accessing or releasing restricted funds should only be considered if other options are not possible.

There is an array of government support available, such as the Coronavirus Business Interruption Loan Scheme, Gift Aid on cancelled events, deferral of VAT payments to name a few.

Financial management

Financial management is at the heart of dealing with COVID-19 for charities, if they are to remain going concerns. Nearly 75% of charities are micro-organisations with income of £100,000 or less. Thus, it is likely that many charities will unfortunately close due to COVID-19 financial difficulties.

A cashflow assessment is vital, along with determining how on hand funds such as unrestricted and restricted funds can be used. Develop new fundraising plans and long-term forecasting will help navigate through these difficulties times. There will inevitably be accounts and audit implications which will need to be considered.

Consider how is your charity reacting and adapting to these exceptional times. Have you got a business continuity plan? Is there an updated financial cash flow forecast? What services can be cut or deferred? Who have you got on your team to see through this challenge?

People

The last point there is absolutely key. Ultimately, it is all about people. Looking after the welfare of all charity stakeholders is vital to ensure continuity. Look at the team you have, Trustees, Executives, Staff, Volunteers – and ask yourself do you need to recruit new team members with more online and digital experience, more financial planning experience, more strategic and business minded thinking? It is safe to say there will be lot of talented people looking for work right now, so consider getting them onboard to help your charity rise-up the challenge of COVID19. The Charity Commission themselves highlights that charities should seek professional advice as required, given some of unique financial and business planning requirements due to COVID19.

The overall arching aim should not only be about dealing with the new normal, but thriving in a sustainable way in the new normal.

Meet our speakers

Ashish Patani, Director of Ashlynwood, is a qualified Chartered Accountant with Investment Banking and Big 4 experience. To read more, click here.

Heather Benjamin is proud to have served on several charity board roles since she left her executive career (where she was the Chief Procurement Officer) eight years ago.

Her charity roles include her current Chair position at Air Ambulances UK, and she was the Chair at Walsingham Support (a learning-disabled charity) for six years. She has since been appointed Honorary President when she stepped down. Heather has previously been a trustee in Volunteering England and for a music organisation (one of the passions in her life ) – The Academy of St Martins in the Fields international orchestra.

Heather has also held board roles in her portfolio, in private, commercial and membership associations across the health, water and financial services sectors.

Paresh Shah has been a financial adviser for over 30 years. Paresh deals with wide aspects of financial planning in particular business owners and charities manage their finances effectively. We know people are too busy to sit down and look at their finances, Paresh provides simple solutions to enhance clients wealth.