Legal experts warn of third sector cashflow struggles while applications are processed.
Legal experts have welcomed the UK Government’s £30m pledge to Scottish charities but warned the money won’t provide a “quick fix” for those organisations facing immediate funding problems.
Last week, chancellor Rishi Sunak unveiled a £750m support package for the UK’s charity sector, with £30m ring-fenced for organisations in Scotland.
Half of the funding will be directly allocated by to charities providing key services during the coronavirus outbreak, with the rest going to small local charities such as those delivering food and essential medicines and providing financial advice.
However, lawyers from legal firm Lindsays warned that charities applying for funding from the package will struggle with immediate cashflow issues while applications are processed.
Alastair Keatinge, Lindsays’ head of charities, 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.”
Keatinge advised charities to stay in touch with their lawyers throughout the coming weeks, and to ensure good governance is followed while the crisis is ongoing.
He added: “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.”
Lindsays’ also welcomed the chancellor’s announcement of £200m for hospices around the UK. The firm counts a number of hospices among its clients.
David Dunsire, who specialises 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.”
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