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Charity Administration and Coronavirus

on Thursday, 02 April 2020.

Alongside supporting staff, transitioning to remote working where possible and weathering the financial impacts of the coronavirus, charity leaders also need to consider the impact on charity governance arrangements.

Charities will want to avoid meetings in person to comply with guidance on social distancing. At the same time, many charities will face deadlines for holding meetings (particularly annual general meetings or 'AGMs') and they may not have either the constitutional provisions or the technological infrastructure to allow virtual meetings or for decisions to be made in writing.

The Commission has not issued specific guidance on this issue but, more generally, the Commission has indicated (unsurprisingly) that 'it will take a pragmatic and proportionate response if trustees can demonstrate they are acting in good faith.' In its Coronavirus (COVID-19) guidance for the charity sector published on 19 March 2020, the Charity Commission has said:

'We want to assure charities that our approach to regulation during this uncertain period will be as flexible and pragmatic as possible in the public interest, whilst helping trustees to be aware of and think about the wider or longer impact of their decisions on their charity.'

On Saturday, 28 March, the Business Secretary provided further reassurance, at least for those charities established as companies. He announced that:

'the government will introduce legislation to ensure those companies required by law to hold Annual General Meetings (AGMs) will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus.

Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings.

This measure follows an announcement earlier this week that companies would automatically and immediately be granted a three-month extension to the filing of their accounts following a fast-track online process.

Over 10,000 businesses have already successfully applied for the extension.'

We await further details of the proposed legislation. Until the new rules take effect, charities will need to plan on the basis of existing rules and in the context of postponed meetings there remains the possibility of a challenge from an interested individual. The risk of such challenge is likely to be low but it cannot be ruled out. On the risk of a legal challenge, the Commission says (in the context of Annual Return deadlines) 'Where you face real and urgent legal issues, you should take advice on these'.

For these reasons, and in the interests of good governance, charity governance leads will want to ensure that they are clear as to the legal framework they face - and clearly document the basis for any decision to take a pragmatic approach to meetings and other governance matters in the wider public interest.

  • As a starting point, you should confirm the constitutional requirements: are there provisions requiring that a specified number of board or general meetings must be held each year or that such meetings must be held within a specified period?
  • Can meetings be held by electronic means? Many charities can hold trustee meetings by video conferencing - where participants can see and hear each other and all agree to this arrangement. The range of video conferencing facilities is growing fast and an increasing number can be accessed free of charge. General meetings of a charity's members will be more challenging unless there are specific constitutional provisions which permit this type of communication.
  • Can decisions be made by written resolution? Your constitution might permit decisions to be recorded in writing such that a meeting could be held by conference call with a follow-up written resolution to record any decisions made.
  • Where making a written resolution is not practical (for example, because of the number of people involved), or not permitted by your constitution, it may be necessary to consider meeting by conference call and ratifying the decisions at a later physical meeting.

Meetings should not be held unless it is safe to do so, and the risk of a challenge is likely to be low, but charity leaders will want to ensure that they can demonstrate that they have been conscientious in ensuring governance requirements have been met as well as they can be - and transparent where it is not possible to do so. It will be necessary to rely on the governance records once we have returned to normality.

For specialist advice on charity administration and governance, please contact Jaime Hobday in our Charities team on 0121 227 3703, or complete the form below.

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