Charity operations in COVID-19 environment
CHARITY OPERATIONS IN COVID-19 ENVIRONMENT
Many charities' operations are affected by COVID-19. This may mean that some or all of your charity's activities may need to be modified or even temporarily halted.
The ACNC stated that is important for charities to keep everyone informed of what it is doing, and why. Regular communication about a charity's changed activities should be a priority.
The commission stressed if your charity's operations do change, it is important it remains consistent with its charitable purpose – what it was set up to achieve.
The ACNC has advised also that each charity needs to consider the financial effects These can include:
- Considering the use of reserves
- Assessing their eligibility for the federal state or territory stimulus packages
- Considering any other financial assistance available (for example, business relief packages from banks or financial institutions)
- Assessing future cash flows and doing a forecast – or adjusting their forecast – - in light of current events.
- Speaking to funders about the effects of cancelling or delaying activities that are part of funding agreements
- Knowing fixed costs and when they will need to be paid. Not committing to any more expenditure if possible
- Reviewing existing liabilities (for example, exploring options with banks or financial institutions, including deferring loan repayments if applicable).
Responsible Persons should speak to their charity's accountant and auditor in preparation of budgets, forecasts and financial statements.
For a charity that has decided to cancel or postpone a fundraising event there may be questions raised over what to do with any money already committed (for example, through ticket sales or other purchases). For example,
- Will the money be refunded – either immediately or in time?
- Will the charity hold the money until the fundraiser is rescheduled?
- Will the charity commit the money towards a future event or effort?
The ACNC stressed that it important that a charity is transparent about what it is going to do:
It is important that it communicates clearly with supporters and other stakeholders the reasons why it made the decision, as well as the measures it has in place to ensure the funds are properly refunded or used in line with donors' original intent and the charity's charitable purpose. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .
