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Covid-19: what should charities and social enterprises be doing to ensure survival?

07 May 2020

What happens next? Here are our recommended steps.

Back in 1815, a volcano erupted in Indonesia which sent clouds of ash into the air, blocking out the sun and leading to crop failure in many parts of the world. Resulting famine meant that people kept fewer horses, because they were unable to feed themselves, let alone their animals, leading to a search for alternatives to horseback travel.  The need was met through the invention in a small German town of the laufmachine or dandy horse, and this pedal-less bicycle was the forefather of the bicycles we use today.

As well as a nice story, this demonstrates that global catastrophe can be a catalyst for innovation.  During our recent webinar on 'Covid-19: what happens next', 95% of charities and social enterprises said they were confident that their organisation would survive the current situation, even if they weren't yet sure how.  Our sector is used to the need for resilience and perseverance in the face of financial and other difficulties and this positivity is reassuring. 

Despite alarming reports in the press about the bleak future facing charities and social enterprises, perhaps we should be looking at the current situation as an opportunity to do things differently.  This requires an assessment of existing governance structures, in order to ascertain how they might be strengthened to cope with the new future.  We look here at three key areas for review: strategy, internal governance and ways of working.

1) Review your strategy

Carry out a strategic review of your objects and purpose, and assess whether any strategic plan which the organisation has in place is still fit for purpose.  A strategic plan is supposed to be a living document, not just something which is developed and then stuck in a drawer.

Ask yourself which of your activities have the biggest positive impact on beneficiaries?  You need to understand which activities you undertake have the biggest possible impact for the lowest possible cost.  Do a cost-benefit analysis and stop delivering certain activities if necessary.

Now may actually be the time to explore new areas of activity, especially to meet changing needs as the social, environmental and economic impacts of Covid-19 begin to bite.  You may develop new means of achieving your existing objects, or amend those objects to expand what you are currently permitted to do.

Most charities will need to approach the Charity Commission for consent before widening their objects.  Any proposed changes must be reasonable, consistent with what your charity does, and must not undermine your existing objects. The Charity Commission has said they will prioritise requests required urgently because of Covid-19.

2) Review your internal governance processes

If a longer term move toward remote working is adopted, you need to ensure systems of internal governance and financial accountability are clear, written and adhered to.  In other words, make sure that there are clear terms of reference for subcommittees and key positions, with clear lines of reporting.  People need to know what they are enabled to do and within what limits. 

Similarly, review your delegation arrangements to understand how contractual arrangements may be agreed and executed in a remote environment.  Who has the authority to sign what, and within what limits (especially financial)?  Our article on signing contracts while in isolation gives more guidance on this topic, available here.

Boards may need to hold more regular meetings to keep up to speed with how things are affecting the organisation – especially when things are changing so quickly.  They need to know what’s going on in the organisation, particularly when things might be financially difficult.  If you are holding remote meetings, make sure your governing document permits maximum flexibility for holding remote meetings and if necessary, update it.  We have written a previous article about holding remote meetings, which is available here.

It is also a sensible time to review key contracts as part of a wider risk review, to understand the position of the organisation if it is unable to deliver goods or services, or receive goods or services.  Check whether contracts contain force majeure clauses entitling parties to walk away (and if these cover Covid-19), and consider what rights of termination each contracting party has.  For more guidance on contracts and rights of termination during the Covid-19 epidemic, see our earlier article here.

3) Review your ways of working

It is perhaps obvious, but with more people working from home, there may be a reduced need for office space, so you can streamline, reduce overheads and save costs. 

You may be able to take advantage of the community activism which has been strengthened during the Covid-19 epidemic by taking on new volunteers – especially people who have been furloughed (as long as they haven't been furloughed by you).  The economic impact of Covid-19 is also predicted to have a significant impact on unemployment rates, so can your organisation do anything to provide employment, training or workspace opportunities to the newly unemployed?

You might also consider – or reconsider – collaborative working or even full blown mergers, to save costs and open up new areas of work for your organisation.  A useful starting point for charities considering collaborations or mergers is the relevant Charity Commission guidance, available here.

We have all been required to upskill very quickly over the last few weeks, and most are now adept at using Zoom, Hangouts, Teams and the like.  Can your organisation make use of these virtual platforms by delivering their services or holding fundraising events remotely?  Many are already doing this: schools and universities have moved online, and arts and cultural organisations have been offering shows and tours via virtual platforms.  My own cycle touring festival was forced to go virtual, with the surprising benefit that we reached over 1,100 people from all across the globe, instead of the 300 or so guests we usually attract.  We must however bear in mind those sections of society which are digitally excluded, so may still need to be reached through conventional means.

The new future

No-one knows what the future holds.  All we can do is make sure our organisational structures are as strong as possible to cope with the changing environment we are faced with.  Now is not a time to bury our heads in the sand: instead we need to be thinking creatively about our strategy and ways of working, to ensure we continue to have a positive impact through the work we do.

This article is based on a recent webinar hosted by the Wrigleys team, exploring what the future might hold for charities and social enterprises following the Covid-19 epidemic. 

If you would like to discuss any aspect of this article further, please contact Laura Moss or any of the Charities and Social Economy team on 0113 243 6100.

You can also keep up to date by following Wrigleys Charities team on Twitter

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors. 

Laura Moss View Biography

Laura Moss

Partner
Leeds

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