Government cash boost for charities won’t provide quick-fix for those plunged into crisis, lawyers warn

Government cash boost for charities won’t provide quick-fix for those plunged into crisis, lawyers warn

Alastair Keatinge

A £30 million pledge to support Scottish charities through the coronavirus crisis is welcome but will not tackle the immediate cash flow problems leaving many in a fight for survival, lawyers have warned.

Alastair Keatinge and David Dunsire, of Lindsays, are advising a string of organisations facing uncertainties on a number of fronts after having their incomes wiped out as a result of the pandemic.

Chancellor Rishi Sunak announced a total £750 million package of support for organisations across the UK, with £30 million of that ringfenced for organisations in Scotland.

The team at Lindsays is working with charities to help them navigate issues surrounding employment, property, governance, partnership working and financial liability - all impacted by the consequences of coronavirus and the lockdown it has forced.

Mr Keatinge, partner and head of charities at Lindsays, said: “The Chancellor’s announcement is, of course, very welcome and recognises the importance of charities.

“But while it’s great to have these funds, this doesn’t get money into the bank immediately - and the problems many charities face are very much immediate. Charities don’t generally have huge reserves and, with no money coming in, they still have all of their running costs to cover. We can all see that the next couple of months are going to be difficult and, unfortunately, there is no magic wand to turn this around.

“Because time will be needed to process applications, we presume money for those successful from this week’s announcement is unlikely to be there for the next round of salaries and perhaps rent payments.”

Mr Keatinge added: “Charities would be well advised to keep in-touch with their lawyers as there are many issues they must consider at this time, including governance.

“In terms of liability, it’s important that trustees consider a consensus of opinions, make sure they are realistic - and ensure that every decision taken is minuted. It’s important that they make sensible decisions and are shown to be dealing with matters.

“It may be that some smaller charities have to speak to larger ones to see if they can work together to get through this.”

Just over half of the UK’s cash – £370 million – will be distributed by government departments to small local charities working with vulnerable people. Up to £200 million will be awarded to hospices, Mr Sunak said.

A number of hospices are among Lindsays’ third sector clients.

Mr Dunsire, who is a charity trustee as well as specialising in the sector’s legal affairs for Lindsays, said: “The money earmarked for hospices will certainly be welcomed by those with whom we work. Like many, they have been hit hard by the closure of charity shops and cancellation of fundraising events.

“The money means they can keep providing beds, specialist clinical care for those affected by terminal illness and staffing to relieve pressure on the NHS. It’s still important, however, that people continue to support their local hospice in any way they can. We are working with our clients in this area to ensure they are best placed from a legal perspective.”

The Chancellor’s cash announcement is on top of those made already by the Scottish government to support those whose fundraising has dried up and who are seeing their cash reserves depleted in order that they can continue their work, which includes critical care services. These include the £50m Wellbeing Fund and £20m Third Sector Resilience Fund.

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