Over the last 12 months, many charities have changed the way they fundraise and deliver services to meet the challenges of the pandemic. This has made it more important than ever for trustees to exercise scrutiny and challenge charities.

And while we are on the road to coming out of lockdown, charities are likely to face difficulties for some time to come.

Here are six big questions trustees should be asking to ensure they fulfil their obligations of being accountable, exercising reasonable care and skill and managing the charity responsibly. 

1. What is the impact of Covid-19 on the charity’s finances?

When restrictions were first introduced last March, some charities, including those involved with arts and culture, had to immediately stop all planned activity. Others, such as food banks and domestic abuse charities, have been incredibly busy delivering frontline services to meet increased demand. While some have seen funds dry up, others have benefited from a surge of community support.

Trustees need to know details of how the pandemic has impacted the charity’s income and outgoings. It is important to note that a charity that has not been able to operate as usual may not necessarily be facing financial difficulties. Trustees need to get the whole picture to ensure they understand the charity’s unique financial position.

2. How have supporters been impacted?

Trustees also need to understand how the charity’s main supporters have been affected. Individual donors may be facing unemployment or a reduced income, for example. Similarly, there will be others who have additional disposable income and this presents an opportunity for attracting new supporters and donors. Trustees of a charity that is reliant on public money, from the Local Authority, for example, will need to understand the impact of the pandemic on these funding streams.

3. Is the charity exercising good governance?

In challenging times, not for profit organisations may need to make bold or difficult decisions. If the charity is changing the way it delivers services, for example, trustees must ensure rigorous and robust systems are in place.

The pandemic has led to a growth in volunteering, which is a massive opportunity for some charities. However, it is crucial that charities carry out all the necessary checks on volunteers and follow safeguarding procedures, which can be more challenging when people are volunteering remotely.

4. Are proper financial controls in place?

There has, sadly, been an increase in charity fraud during the pandemic. Trustees need to ensure they receive regular assurance that financial procedures are being properly followed and that the right controls are in place. 

5. Is the charity maximising its resources?

Trustees should be asking charities if they are doing all they can to maximise their resources and make the most out of new opportunities. Is the charity aware of all the relevant tax benefits? Is it leveraging public support? Is it accessing grants and new sources of income? Charities should also be considering whether they are making best use of their paid staff and volunteers, especially if they have benefited from an increase in volunteers during the pandemic.

6. Does the charity have an opportunity to innovate?

While these are challenging times, the pandemic has created opportunities for charities to innovate. One exciting trend I have seen is the increase in charities collaborating with one another. This may involve jointly delivering services or sharing resources and could even lead to opportunities for like-minded organisations to merge. 

Others are reviewing their property requirements for potential efficiencies and cost savings. Those that are delivering more services remotely or have staff working well at home, for example, may be able to reduce their property outgoings.

Many charities have taken great strides to digitise, including running online events and delivering services through video conferencing rather than face to face. Trustees should ask charities if there are opportunities to upgrade the CRM system to track income and engagement across activities in real time. Done properly, this could really help charities to prioritise their activity going forwards.

In recent months, we have seen progressive charities engaging with existing and potential supporters in a really inspirational way. Trustees should be challenging their charities to tell their story and make an emotional connection with funders, ensuring people can see and feel the benefit of their support.

By Adam Croney, Partner

For further advice, please do not hesitate to contact me or your local Thomas Westcott office.