Charity

COVID-19 is having an unprecedented impact across the UK (and the world at large!). Governments and organisations are being forced to adapt their working practices in order to carry on functioning, while observing advice on how to stay safe during these challenging times. Charities and third sector organisations have also had to adjust in light of COVID-19, dealing with some issues which are shared by other sectors and others which are unique to charities. Against this background the Scottish Charity Regulator (OSCR) has issued guidance on how to grapple with the sector specific issues faced by charities (available here) much of which applies equally to third sector organisations.

In this blog post we highlight some of the key points which charity and third sector leaders must keep in mind while they adjust to working in light of the COVID-19 outbreak.

What does COVID-19 mean for the management of charities?

Following the COVID-19 outbreak a great many things have changed and some of these will apply to charities. However, one feature of charity law which will not change is who has responsibility for their ongoing viability and leadership. While this varies depending on a charity’s structure, leadership of the charity will remain with its trustees, its directors or the members of its management committee.

What does ‘social distancing’ mean for charity leaders?

The advice from government sources is that in order to limit the impact of COVID-19, the UK population should practice ‘social distancing’, which has resulted in much of the UK’s population embracing ‘working from home’ or working virtually instead of making the daily commute to their office / place of work.

What does this mean for charity leaders who may need to meet to discuss charity business? A charity’s founding document tends to have detailed provisions on how / when charity leaders should meet to discuss charity business. Where face-to-face meetings are not possible, communication may be allowed via email or video conferencing. Taking account of the different kinds of charitable form we set out below the key documents that should be checked before attempting to make alternative arrangements for discussing charity business:

  • the trust deeds of charitable trusts.
  • the articles of association of charities established as companies.
  • the constitutions of charities operating as SCIOs or unincorporated associations.

OSCR has given specific guidance on the holding of virtual meetings in the absence of clear guidance in a charity’s governing document:

“Where it isn’t going to be possible to get together face-to-face, holding meetings virtually could be a good option. Some charities have specific provisions in their governing documents to allow meetings to take place over the phone or using digital solutions. However, in the current situation, we are happy that charities hold their meetings in this way even if the governing document doesn’t say anything about this. This will allow charity trustees to have important discussions and to take decisions at this difficult time. Where you decide to take this virtual route, you should record that they have done this, thus demonstrating good governance of your charity.”

What if your charity could help with the COVID-19 crisis?

Many in the charity sphere may feel that they wish to help to deal with COVID-19 and there are a two key points to note here:

  1.  OSCR has commended all those that believe that they may be able to assist in what can only be described as a unique situation.
  2. It is a founding principal of Scots charity law that charities must operate in line with their governing document / charitable purposes. Charity leaders must not take decisions that are at odds with the charity’s purposes.

If you would like to change your charity’s purposes in order to assist with COVID-19 then OSCR will consider that as part of the ordinary process of changing charitable purposes – OSCR will still need to consent to the change. OSCR has indicated that it would look to deal with those applications as quickly as possible when they are made.

Other charities may be well placed to assist with COVID-19 (and have the comfort that doing so would be in-keeping with their charitable purposes). While this may work from a legal perspective, the mechanics of that assistance will need to be worked through by the charity’s leadership against the obligations they owe to the charity’s beneficiaries, employees and other stakeholders.

What if COVID-19 is negatively impacting your charity?

COVID-19 has severely damaged many organisations in the UK – some have had to reduce their workforce in order to avoid insolvency while others have had no choice but to close their doors overnight. At first glance this may not be relevant to Scottish charities however many of these organisations may contribute significant sums in donations to charities. The reality is that many charities may be facing threats to funding streams which could have a negative impact on them in the long term.

Charity leaders should keep in mind the availability of the ‘notifiable events’ regime where a situation is likely to have a long term, detrimental impact on their charity’s activities. Notification to OSCR would allow it to engage with charity leaders at an early stage and may well enable steps to be taken to shield the charity from any significant threats to its stability.

Even in these unprecedented times it is essential that charities and third sector organisations follow the terms of their governing documents so far as possible and abide by the law and regulations. If in doubt, legal advice should be taken to ensure that reputation is maintained and that robust decisions are made which are beyond challenge.

Kevin Winters
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