Foundations and coronavirus: three considerations
The impact of coronavirus on the UK and beyond is becoming clearer. The disease has spread beyond China and measures within Europe to contain it have been ramped up with restrictions on movement in Italy in particular.
Within the UK, the Chancellor yesterday announced a major package of measures in the Budget. He also said that the expectation is that one in five workers will be off sick at any one time.
Foundations, and the wider charitable sector, are not immune. At ACF we’ve been working up how we respond and have been talking to colleagues in other European countries, to other sector umbrella bodies and to foundations themselves. This post summarises some of our thinking but we’ll be putting up more information here as we develop it more.
So what should we all be thinking about?
Firstly, there is the impact on our own operations. Our immediate thoughts will be about our own staff and volunteers and their health. NCVO have put together some good information and there is also plenty of advice from the NHS about this too.
We could well soon see restrictions on movement or at the least, a strong presumption that staff should work from home. There is a wealth of information out there already about home working but if you’re new to this have a look at Acas resources. Working Families also has useful advice for staff.
For ACF, we’re also thinking about our approach to travel and to events. At the moment, we are still planning to run the events we are committed to but we will not be adding new events. We are keeping this under review and will be following the Westminster government’s advice on this.
The second area is the impact on the causes that foundations support. Many organisations will face problems over delivering their services with workers and volunteers off sick, in self-isolation, unable to work in some locations or looking after kids off school or ill relatives.
There could be specific problems for some causes, for instance the Trussell Trust has highlighted issues for food banks.
Many organisations are also likely to take a hit on income from fundraising or trading. Fundraising events may be cancelled and charity shops or venues may be closed. Charity Finance Group has advice on measures that charities should be taking to deal with this eventuality – including on issues around whether insurance covers some of the costs involved .
Foundations can also help if this is the case. We know that Italian foundations are looking at extending grants for six months without obligation and in other countries there is discussion on converting existing grants that were awarded as ‘restricted’ for specific projects to ‘unrestricted’ for any purpose in line with the charity’s objectives. Foundations will want to ensure that any changes to existing grants are made in accordance with governance requirements and that the receiving charity accounts for any change to funding correctly.
Foundations may also want to check whether the organisations they work with are facing cashflow problems which may affect their solvency and therefore ability to deliver on programmes, and be thinking about whether or how they can help those affected.
There will also be a rise in demand for some services, particularly those which involve working with communities most affected by coronavirus (eg charities working with people with particular medical conditions or social care charities working with older people) but also potentially more generally if the economy takes a hit and more people are in need of help.
But this does not yet seem like we are in an “emergency” response situation. However, if the impacts become more severe then there may be a role for foundations. If children are off school for long periods which strains the support that can be offered and where free school meals are not available, then it is likely the children and young people’s sector will want to act. And if older people are self-isolating in their own homes or face problems from a lack of available care in other settings, then again an escalated response may be needed.
The third area for consideration is the impact on foundations’ investments, which are the major source of their income as a sector. The dramatic falls in global stock markets have certainly focused media attention over the past week. However the overwhelming majority of foundations are long term investors. Many will have benefited from strong returns over the last few years in financial markets generally – indeed in 2019, global equity markets were up by 26%. The Foundation Giving Trends research series shows that many foundations choose to maintain or increase their level of grant spend when times are hard, even if their income and capital falls. Clearly they cannot do this forever, but at this stage it is too soon to know the long-term impact of coronavirus on investments.
We’re also looking at what role central government can play in supporting charities through this. With other umbrella bodies, we wrote to the Chancellor to ask for action in the Budget. Though some of the measures for business may assist charities, the bulk of the offer was focused on business rates and therefore less useful. We’ll be working with others to see what other opportunities there maybe to develop other ways for government to support the sector as it faces these problems.
Many organisation and individuals look to our sector at times like these. Our reputation with them will be shaped by our response at this time. I know from past experience that we will do all we can to step up to the challenges ahead.
Finally, I’d really welcome thoughts from our members on what you’re thinking about as you plan your response. Do feed back to us via Twitter @ACFoundations or e-mail firstname.lastname@example.org.