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What Got Us Here Won't Get Us There - Planning for a Post-Coronavirus World

on Thursday, 11 June 2020.

How can charities plan for a post-coronavirus (COVID-19) world? Trustees have a duty to govern which includes the need to plan, but as even the short term future is uncertain, how can this be done effectively?

Charities, like all organisations, are at a critical point in their coronavirus response. Although it may not appear so, we are actually in a lull, a deceptive place of false possibilities. A great deal of the response so far has focussed on shoring up a pre-existing position concerning service provision, staffing, funding and scale. 'How can we keep going?' has been interpreted by many, perhaps subconsciously, as 'how can we keep things the same?'. But government support schemes such as furloughing and business interruption loans are stop-gaps, not long term solutions. Whilst these have been a lifeline, trustees and senior management teams should not be tempted to think activity and funding will necessarily return to pre-coronavirus levels. There is no guarantee of that.

Trustees have duties to protect assets and funding, manage risks and ensure their charity's purposes are fulfilled. Senior management have responsibility to support the trustees in this as employees. Even in less extraordinary times, this can be a considerable challenge and the need to balance charitable aims with commercial realities runs through the day-to-day decisions which need to be made to keep a charity in good health. The pressures added to that challenge by coronavirus are huge - for some charities they have already proved catastrophic, leading to closure, and we have been talking to charities about the very difficult choices with which they are faced, helping to steer them through.

The Charity Commission has detailed guidance which is relevant to this, including:

Charities and risk management

Coronavirus guidance for the charity sector

Manage financial difficulties in your charity caused by coronavirus

This article is also a part of a wider series of guidance specifically for charities which we have produced on the legal, regulatory and governance aspects of coronavirus. If you would like to discuss any challenges you are currently facing, please get in touch with a member of our Charities team.

Our experience with charities facing a wide range of challenges over the years gives us an understanding of the way ahead and the characteristics of good governance which will get us there.

Close Governance

There should be no argument as there is an essential need for this. You have no hope of governing a fast-moving and unpredictable time unless you are on top of finance, services, regulation, beneficiary needs and other management information. Thankfully, we have technology to help with data and communications, and the Commission has issued reassuringly pragmatic guidance as to how to deal with meetings during lockdown. So, you should meet (by video conference for now) often and keep in touch in between, making decisions as they arise. This may mean weekly meetings, or at least the commitment to host a brief call for specific issues, as well as keeping in touch via email or an internal web portal to monitor key information. As well as advising on meeting practicalities, we have also helped charities streamline their reporting and delegation frameworks to ensure they are as agile as needed. If you have not addressed these aspects of governance, do let us know if we can help.

Radical Thinking

Your charity may not be able to return to the nature and level of activity of 2019 and before, at least in the medium term. You may have seen funding reduce or evaporate, staff made redundant, contracts terminated, leases surrendered, or services reduced or ended.

Those steps will not be reversed quickly. Rather than attempting to fundraise, win contracts or hire staff to regain that lost position, many charities may be better off planning for a radically reduced scale of operation or even a completely different operating model. Do you need 12 service lines or operating sites, or is 3 a more viable medium term aim? Instead of running service contracts, would you be better off now as a pure grant maker? If you had 75% of your income from trading and 25% from donations, should you budget on donations only for the short term until you're able to begin trading viably again? Should you collaborate or merge with another charity instead of a difficult struggle to regain a past position?

Use of Technology

We must use the tools we have, and thankfully technology is our friend just now. Daily monitoring of finance and other data, risk management, video conferencing, remote working and agile decision making are all possible at great capacity and relatively inexpensive cost. This is a huge help to trustees and senior management battling to keep their charities healthy and preparing for an ever shifting future. We must always be alert to data protection responsibilities and cyber risks, but technology is also helping us adapt to that uncertain future.

Versatility

We have heard it said, 'focus on what you can control, not on what you can't'. Governing a charity during uncertain times means you must be ready to respond swiftly and appropriately to changing circumstances. If you can deliver services in a different way, obtain funding from different sources, or bring in structural and management changes for staff, then build in those possibilities to your plans and monitoring. There are likely to be legal considerations in these changes, but those are surmountable and the effort in doing so will be worthwhile if the charity survives and thrives. Perhaps things have worked very well in the past for your charity year-on-year, but that has now been greatly undermined by coronavirus. You cannot simply assume the problem will go away - you must plan for different possible operating models from now and be versatile to switch from one to another or some combination you may never have used before.

Scalability

Many charities have seen (or will see) reductions in their income, service provision, staff and volunteers, and reserves. As we've said, a versatile and possibly very different future must be contemplated. However, there are also likely to be opportunities as charities with reduced operating structures and costs seek to meet the community's needs post-coronavirus. Those with lean, scalable operating models should be in a good position to meet those needs and grow. Trustees and senior management should plan now, if they can, to be such a charity.

Collaboration

The pressure may be too great for some charities to bear alone, yet that need not be thought a failure but rather an opportunity. Collaboration with one or more other charities can arise for many reasons and even where one is in need of support or rescue, a strong solution can emerge which preserves the name, services and finances of a charity which might otherwise have been in real difficulty. We have supported a great many charities through these changes, whether by a collaboration agreement, management arrangement, governance sharing, transfer of business or a full merger. In most situations, continuity rather than calamity is the result.

None of us caused the present troubles. Our responsibility is to steer a course through them. In doing so, we may need to acknowledge that we are only part of a story. The hard work and funding which brought a charity to where it is now may need to be channelled in a different way as a result of coronavirus. If that means a radically different operating model, greatly reduced scale, collaboration or merger, then that is what must happen. It is no reflection of past success or effort that a new path might now need to be taken. Governance often requires boldness and sometimes humility.


The VWV charities team would be pleased to talk to you about any aspect of governance and legal issues arising from the Coronavirus situation. If you'd like to contacts us, please contact Chris Knight in our Charities team on 07468 698954, or complete the form below.

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