A GUIDE FORCHARIT IES ANDSOCIAL ENTERPRISESNAVIGATING FUNDINGPOSSIB IL IT IESDURINGCOVID-19

W R I T T E N B Y J AMES BURROWS

W I T H S U P P O R T F R O M

STEPHEN MUERSMELANIE MILLSISH ITA RANJAN

M A R C H 2 0 1 9

A GUIDE FORNAVIGATINGFUNDING DURING COVID-19

The Covid-19 outbreak isaffecting us all, across the UK,and the world. Whilst thecoming months remainuncertain, it is clear that theimpacts will be felt mostkeenly by those mostvulnerable in our society. We know that everyone isdoing all they can to supportthose they love, and thosethey work hard to supportthrough their incredibleorganisations. Understandably, manycharities and socialenterprises are askingwhere they go next, how theyget there, where to findfunding, or how to managetheir existing funding.

Key principles to help yourthinking Making the most of governmentadviceWhat to consider with yourcurrent grants What to consider if you currentlyhave social investmentNavigating your relationshipwith banksOperational and businessplanningFurther support & resources

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This is a tricky time for everyone,and there is a lot of informationflying around. It can be hard to know where tolook, or who to listen to. Wewanted to pull some of thatadvice and information togetherto make it as easy as possible foryou to navigate this changinglandscape.

BACKGROUND

CONTENTS

Prioritise the health andwellbeing of those you exist toserve, and your staff. Read the UKgovernment’s guidelines on howto approach this are. Focus your operational support inensuring that any of theindividuals with particularvulnerabilities that you exist toserve are looked after. Accessresources on health andwellbeing here.

While nobody knows exactly how long this will last, it may be thatthe effects are being felt for most of the rest of the year. This may be a marathon rather than a sprint so think about thelong term.

In an unpredictable situation like this, every organisation will need towork out the right approach for themselves. Here are some principlesto help guide those decisions.

PRIORITISE HEALTH & WELLBEING

ACT QUICKLYThe sooner you act, the moreoptions you provide for you andyour organisation; it may make allthe difference.

FACTOR IN THE LONG TERM PERSPECTIVE

PRINCIPLES TO HELP YOUR THINKING1.

How much income is definitelycoming in? How long will this last you if that’s allyou have?Are there any spending plans

This is vital information that willsupport the next moves that you make. Three key things to find out:

it’s worth putting on hold?

With customers, with staff, with funders, with stakeholders – keep intouch. Let them know what you’re planning and ask their advice. We are all in this together and they will be glad to hear from you –even if their responses are a bit slower than normal. Find moreinformation on planning your communications here.

What do the needs of yourorganisation look like given differentsituations occurring? Which do you believe are most likelyand why? How does this link into your businesscontinuity planning exercises?What activities do you need to stop,start, accelerate and continue?

As things rapidly change, it is moreimportant than ever to stop and take amoment to scenario plan for yourorganisation.

GET A GOOD GRASP OF HOWMUCH CASH YOU HAVE

ACT QUICKLY

COMMUNICATION IS KEY

PRINCIPLES TO HELP YOUR THINKING1.

2. MAKING SENSE OF THE GOVERNMENT SUPPORTThrough the budget, and subsequent Treasuryannouncements, there is a range of support from thegovernment that is available, that you might be able tomake the most of. There will also be a range of new funding sources that arepulled together from government sources, wider partners,and additional funders, all of whom care about supportingyou through this period. For example see the National Lottery Community Fund’sguidance on the type of thing to expect. As grant fundersand private businesses also announce support or grants,access up to date information on funding and investmentavailable. On the next page is a breakdown of the key developmentsregarding government support and how they apply tocharities and social enterprises. NB:  An SME id defined as a business that is UK based andemploys fewer than 250 employees as of 28 February 2020.

2. MAKING SENSE OF THE GOVERNMENT SUPPORT

h b i h lid

Coronavirus JobRetentionScheme

HMRC will reimburse 80% of furloughed workers wagecosts, up to a cap of £2,500 per month. HMRC areworking urgently to set up a system for reimbursement.Existing systems are not set up to facilitate payments toemployers.

VAT deferralThis is an automatic offer for all organisations that areregistered to pay VAT. Businesses will not need to makea VAT payment during this period (20th March 2020 until30 June 2020.)

Only if more than 50% of income comes from tradingBusinessinterruptionloans up to £5m

Statutory sickpay relief forSMEs

Small Businessgrant fundingup to £10k

HMRC Time ToPay Scheme

Grant funding 25kfor retail,hospitality &leisure 

12-month businessrates holiday forretail, hospitality &leisure

It covers up to 2 weeks of statutory sick pay for staff whoare sick with Covid-19 or have to self-isolate.

Charities are not currently eligible for this. As theyreceive mandatory rate relief they are not eligible forsmall business or rural rate relief and so do not meet thegateway criteria for this support.

Not for profits are able to take advantage of thisCharities and other businesses with outstanding taxliabilities, may be eligible to receive support with theirtax affairs through HMRC’s Time To Pay service.

For businesses in these sectors with a rateable value ofunder £15,000, they will receive a grant of £10,000. Forbusinesses in these sectors with a rateable value ofbetween £15,001 and £51,000, they will receive a grant of£25,000.

Charities are not currently eligible for this. As theyreceive mandatory rate relief they are not eligible forsmall business or rural rate relief and so do not meet thegateway criteria for this support.

SOCIAL ENTERPRISES CHARITIES NOTES

TYPE OFSUPPORT

Does the developing Covid-19 situation make any of theseimpossible to deliver?Are there key requirements that you will miss?If these are flexible grants for core operations will you be able toshift them to cover new needs, or are they tied to delivery of keyprogramme milestones?Do you have reporting deadlines on the horizon? Do you have capacity to meet these timeframes?Are you likely to need additional funding to meet delays? Will you underspend on certain areas, but need additional cashcoverage on other business critical areas?

With current grants, a good place to start is to considerthe purpose, and the length of time period that the grantis for. Key questions to ask yourself:

Make sure you pick up the phone tospeak to your key contact. Yourfunder should have been in contact,but if not, and given their missions,they may have the ability to beflexible and support you through thisperiod.

GRANT FUNDING, SOCIALINVESTMENT & BANKS

3. CURRENT GRANTS

If you have existing funding, social investment, or banking facilities, you maybe wondering what you need to do and how to navigate relationships withyour funders. In this section, we’ll be looking at what to do with current grants,social investment facilities and relationships with banks or financialinstitutions.

In the NCVO guidance, you can see responses from funders here. The vastmajority emphasises flexibility and support. Your funder will most likely havetheir own guidance on their websites that can give you more information onwhat to expect.

What are the key terms, obligations, or requirements under thesefacilities? Does the current situation mean that the project, or growth, orservice that this was going towards is no longer going ahead?Do your updated forecasts based on delays to delivery, or slowerthan anticipated income, mean you are at risk of missing theseconditions? Even if you are not at risk of missing them, does the developingsituation make a material impact on your organisation’s resilienceunder the current terms?Do you have key reporting requirements, deadlines that you nolonger have capacity for?Do you understand where the developing situation may weakenthe organisation or present key risks in the next 3, 6, or 12 months? What do you need your funder to do differently to help you? Haveyour questions ready so you can ask.

Key questions to think about:

Pick up the phone to speak to your key contact. The key here is toplan ahead, and plan early. This situation is affecting all of theinvestee organisations your social investor has relationships with –even if the impacts are different in each case, so they will not besurprised by your call.

4. CURRENT SOCIALINVESTMENT FACILITIES

SPEAK TO YOUR SOCIAL INVESTOR

The ethos and approach of many social investors is outlined ina joint letter signed by a range of social investors here. Given the broader effects, their focus is likely to be on supportingthe mission of their investees and they will be looking to help. A lotof social investors will already have special sign-off procedures inplace to move quickly to meet your needs and your timescales.

Do you have a business or a charity banking account?What are the features of your account?Do you have an overdraft facility in place already to assist withyour cashflow needs?If not, do you need one? If so, do you need to explore with yourbank whether to extend that or discuss key terms?

Do you have a business loan or a mortgage in place? Are there terms that this situation will potentially impact? The government and the UK banks have put a range ofmeasures in place to support and mitigate some of theseeffects that you may be able to make use of. This is the advice and range of support that is available fromRBS with links to the government sites and relevant support.Other banks will also have information available.

Key questions to think about:

If your organisation has a business or charity banking account thenthere is also a relationship with a bank or financial institution youwill have to consider. It may be that a conversation itself with your bank will be a usefulsource of information about what support could be possible andhow long that would take. Similar to working with grant fundersand social investors, the quicker you pick up the phone, the moreroom for manoeuvre it will give you.

5. CURRENT BANKING RELATIONSHIPS

What is the size, timeframe, and impact of these new/emerging needs on your organisation?Do you have guaranteed sources of income at this timeyou could potentially repay investments with, orproperty/assets that can be used as security? Could any of these be used to raise additional repayablecapital to provide support through this time?

Key questions to think about:

As you navigate conversations and relationships with your funders,whether they be grant funders, social investors or banks, it isimportant that you have a sense of how your organisation'soperations and business continuity will be affected. As you go through your business planning exercise, it is vital toidentify any new or emerging needs.

6. BUSINESS &OPERATIONAL PLANNING

Social investors are looking to support your organisation’s needs,although as over 85% of social investors are charities or soccialenterprises themselves it is likely that they too will be navigatingthrough a unique set of challenges. Find out more what social investors are funding and where via theGood Finance Social Investor Directory.

At Good Finance, as this emerging picture of new funding sourcesand where to go to access it comes together, we will make sure weprovide the clearest view on this possible. Stay posted on news, developments, tools and opportunities via theGood Finance COVID-19 Resource Hub for charities and socialenterprises.

7. FURTHER SUPPORT & RESOURCES

COVID-19 RESOURCE HUB FOR CHARITIES AND SOCIAL ENTERPRISES

For more information and any questions, please contactiranjan@goodfinance.org.uk or tweet @goodfinanceuk.