Coronavirus (COVID-19) legal advice & FAQs for Charities and Social Enterprises

We are receiving an increasing number of queries from clients in the Charity and Social Enterprise sector following the outbreak of Coronavirus and the impact it is having on organisations and people.

Please note that, on 17 March 2020, the Charity Commission released a statement to say that it will, where possible, act in a pragmatic way by taking account of the wider public interest during this unprecedented period. It has said that its contact centre will be open to assist with urgent queries. It has further stated that charities who are unable to submit an Annual Return at the present time can call to request an extension.

Having adopted smart working practices some time ago, Stone King is open for business as usual. Lawyers from across the firm have answered some of the questions currently being asked below. If you have any specific queries or would like legal advice, please contact Hannah Kubie or Stephen Ravenscroft, or contact the Stone King colleagues named on the linked web pages below.

I/we would like to set up a charity which is related to the current COVID-19 Coronavirus pandemic. Can you help?

We can help! Please get in touch with either of the contacts named on this page who will be happy to discuss your proposals and consider how they can best be taken forward.

Do you have any specific advice / guidance for Almshouses?

Clearly the most difficult issues for Almshouses will be taking steps to assist vulnerable beneficiaries who are resident in the Almshouses and, where possible, helping them with arrangements to self-isolate. If you currently have voids, you may also want to consider whether, in accordance with your Objects, you are able to make such voids available to the vulnerable in society that may have a need at this time. For more detailed advice specific to Almshouses we would refer you to the guidance available from the Almshouse Association.

We are a charity-registered school with queries about employees and pupils. Where can we find more information?

We have a wealth of advice and information here

Our organisation is reliant on visitor footfall, what practical steps do we need to take to guard against a significant drop in income?

You should contingency plan for various scenarios, and should model income being lower than previously anticipated and consider how long you can continue to operate and trade, possibly using reserves to do so. It may be that, depending on the financial position of the organisation, you ought to be speaking to your bank at an early stage should you anticipate cashflow challenges. By contacting your bank early, they may be able to work with you to put a manageable plan in place for your organisation in the circumstances.

This is something to consider carefully with your finance advisers and at Board level. On a practical basis, we recommend that you:

  • Monitor carefully visitor footfall and identify whether you are experiencing significant drops.
  • Do not assume that this is a temporary blip and will recover quickly.
  • Identify what costs you are able to control at this stage, i.e. can you defer ordering items for the gift shop for example?
  • Consider your reserves and reserve policy and identify the likely impact on your reserves.
  • Model the effect of a, for example, 25% / 50% fall in visitor income and plan accordingly.

You may also need to consider employment and HR advice to consider the options available in terms of managing staffing need in these conditions. We answer some FAQs on Coronavirus in the workplace here

We are hosting an event at an external venue in two months. If we cancel it, will we still have to pay suppliers?

It really depends on the cancellation terms. A third party may be willing to allow you to postpone events at the moment, but that may require negotiation if the terms are not clear on this point.

Many service or goods contracts will contain a force majeure clause which allows services/goods to be suspended in the event of an Act of God. Check any definitions in the agreement although this should typically include an event such as a pandemic. It may be that the practical effect of this type of provision is limited if a third party has already performed their function or you have paid in advance for something. It may still be worth trying to negotiate in the current circumstances. We recommend that you seek legal advice before invoking a force majeure clause, so that you fully understand your rights.

Do also keep an eye on any updated Government guidance. If the Government bans large gatherings, for instance, and the event in question is affected, your liability to the venue and to any delegates may change under the terms and conditions. Obviously it will be down to what the contract/Terms & Conditions say, particularly vis-à-vis force majeure. It will be helpful to plan for all eventualities early on.

We hire out our building for events but people are cancelling. What are our rights?

It will depend on the terms of your hire arrangements so you’ll need to check the cancellation terms. Your terms may contain force majeure clauses that allow a period of relief in performance where circumstances arise that are beyond the parties’ control. If so, we would advise that you seek legal advice where anyone cancelling an event is seeking to rely on force majeure, so that you fully understand your rights.

Commercially and where possible and practical, you may wish to allow people to move dates until later in the year as this will also help with goodwill and reputation.

We are a charity. What steps should we take to protect our organisation in relation to future fundraising events and appropriate T&Cs?

We advise that you take the time now to familiarise yourself with your contracts, policies and continuity plans.

Where possible, ensure that funds are given without conditions attached.

By ensuring that the charity has up-to-date and helpful contact details for donors or beneficiaries alike will mean that mass communication can be carried out where needed.

We need to hold a meeting electronically, rather than in person. Is that possible?

For organisations which are companies (such as CICs or charitable companies), you can find further information here.

The position is very similar for organisations which are CIOs. For a members’ meeting, do check the constitution to see what is permitted.

Generally, whatever your legal form, you may decide to hold a trustees’ or directors’ (but not a members’) meeting electronically, unless the constitution specifically prohibits it. The electronic means chosen should allow trustees to see and hear each other, for example using video conferencing facilities. For non-companies, relying only on telephone conferencing is more complicated unless it is expressly permitted in your constitution.

As well as the above, consider whether you might be able to resolve to take actions in writing instead. This will depend on your legal form, again, but if the group all agrees (such as a written resolution of the entire Board), this is likely to be low risk.

In summary, review your constitution first and foremost and be aware that convening members’ meetings electronically is generally more complicated. We would be happy to assist with any specific queries.

We are a theatre with charitable status that has had to cancel a ticketed event as a result of Coronavirus. Some of our patrons have agreed to donate the value of their tickets to our charity even though the event has been cancelled. Can we automatically claim gift aid?

There has been a response to a written parliamentary question from the government as follows: “Theatres and other cultural venues recognised as charities by HMRC can claim Gift Aid on freely given donations, as opposed to payments for goods or services; such as admission tickets. These charities can claim Gift Aid on the value of tickets for cancelled events if the patrons have agreed not to be refunded for the cost of the ticket and agree for the same amount to be treated as a donation. Additionally, the charity will also need to make sure the patrons have made a Gift Aid declaration for their donations to qualify for Gift Aid, confirming that they have, or will have, paid enough tax to cover the amount the charity will claim on their donations.

The law and practice referred to in this article has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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