Digital, Culture, Media and Sport Committee: New report on The Covid-19 crisis and charities

The Covid-19 crisis and charities report found that:

• £750 million Government emergency support not enough to prevent closure of charities across the country
• Lack of transparency in allocating funds means deserving charities will lose out
• Secretary of State for DCMS unable to provide sufficient detail or clarity about the eligibility criteria two weeks after HM Treasury outlined support 

Chair of the DCMS Committee Julian Knight MP said:

“The strong message that charities gave us was not that they have some sort of right to survive but that people have a right to the services they provide. 

“We warned the Chancellor that charities told us they faced a £4bn gap in money coming in, with some smaller charities facing insolvency within weeks without immediate emergency support.  

“The sum of money that’s been made available goes nowhere near replacing the income that many charities have lost. We’re urging the government to set up a stabilisation fund to assist organisations to stay afloat so that we avoid increasing hardship among those who depend on charities to help them during this crisis and beyond.”

ENDS

The Report calls for the Government to take urgent action in key areas within four weeks: 

• An immediate review of measures to support businesses to ensure they fully meet the needs of the charity and voluntary sector to prevent charities from folding
• Publication of clear and comprehensive guidance about the criteria that will be used when allocating support and how organisations can apply for it, without delay
• Backing for charity sector's call for stabilisation fund to secure its long-term financial health and diversity

(A full list of recommendations is contained in the report)

Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport is required to report back to the DCMS Committee, ideally by video link, by Friday 5 June to update members on progress in securing additional support for charities and tailoring business measures to their needs.

Business support measures fail to deliver on needs of charity and voluntary sector:

The Government is urged to introduce a separate Coronavirus Job Retention Scheme for charities within four weeks, enabling furloughed employees of charities to volunteer for their own organisations.

Evidence undermined the Secretary of State Oliver Dowden’s previous assurances to the committee that charities would be able to access many of the measures announced for businesses by the Chancellor, such as the Coronavirus Job Retention Scheme and the Coronavirus Business Interruption Loan Scheme.Charities cited barriers to benefiting from support. For example, the furloughing scheme means standing down staff at exactly the time that they are needed to step up. Many charities identify what the NCVO termed an "unintended consequence of the design of the scheme" whereby workers who are furloughed from one charity are able to volunteer their time and services to another charity, but not to their main employer. Charities that receive public funding alongside other income are also ineligible for the Coronavirus Job Retention Scheme. 

Lack of clarity:

The Department for Digital, Culture, Media and Sport and the National Lottery Community Fund are called upon to deliver much-needed clear and comprehensive guidance about the criteria used to allocate financial support alongside information about how organisations can apply for help. The role of Government departments in some funding allocations also led MPs to conclude that such a lack of transparency would mean deserving charities missing out on support. 

In giving evidence to the committee in April the Secretary of State was found to be lacking in detail or clarity on how funding would be allocated. One organisation noted that even a short delay on guidance put charities under increased pressure and could lead to smaller charities folding. 

Stabilisation fund:

In addition to the £750m already announced, the committee is calling for additional support to assist charities and voluntary organisations to stay afloat throughout the Covid-19 crisis. A comprehensive stabilisation fund should be made available to charitable organisations in serious financial need, including those not involved in the frontline response to Covid-19.

The Report notes that in oral evidence, the Secretary of State denied that the sector had ever been in line for a higher funding package in the region of £1 billion, indicating that the Department had not made the case to HM Treasury for such an amount. 

MPs were concerned by the Government’s assertion that it will not be possible to save every charity, given the scale of the loss the sector is warning of and the impact it would have on those in society who rely on charities for support. They say the loss of services provided by organisations, whether or not directly tackling Covid-19, would cause untold damage to individuals and communities.  

NOTES FOR EDITORS:

• More than 70 pieces of written evidence were submitted to the DCMS Committee from charities of all sizes and individuals who benefit from their services, detailing the impact of Covid-19 on their ability to support people across the country.
• The UK has more than 160,000 registered charities, the majority are small organisations with an annual income of less than £100,000.
• The NCVO estimated that charities will lose approximately £4 billion in projected income in the three months from March 2020. Social distancing measures have resulted in an immediate loss of two key sources of income for many: fundraising and trading. 
• Age UK reported that the closure of its 400 charity shops resulted in a loss of "one-third of its income overnight”.
• More than 70% of charities surveyed by the Directory for Social Change reported that without financial support they would "go bust" before the end of 2020.
• Wider activities by charities such as supporting life-saving research affected – the Association of Medical Research Charities stated that more than half of its members "have stopped, paused or delayed the majority (75-100%) of their clinical trials".