Charity changes in a COVID-19 world

Many charities’ operations are affected by COVID-19. This might mean that some or all of them might need to be modified or even temporarily halted.

The Australian Charities and Not-for-profits Commission has stressed the importance of charities keeping stakeholders informed about what they are doing and why. Regular communication about charities’ changed activities should be a priority.

The commission has stressed that if charities’ activities change, they need to match their charitable purpose – what the charities were set up to achieve.

Charities need to consider financial moves that might include:

  • Consider using financial reserves
  • Assessing their eligibility for federal, state, and territory stimulus packages
  • Considering any other financial assistance available (for example, business-relief packages from banks and financial institutions)
  • Assessing future cash flows and doing a forecast – or adjusting their forecasts – 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, and
  • Reviewing existing liabilities (for example, exploring options with banks and financial institutions, including deferring loan repayments).

Responsible persons should speak to their charity’s accountant and auditor in preparation of budgets, forecasts and financial statements.

A charity that has decided to cancel or postpone a fundraising event might need to decide what to do with money already committed (for example, through ticket sales or other purchases).

Questions needing answers might include:

  • Will the money be refunded – either immediately or in time?
  • Will the charity hold the money until the fundraiser is rescheduled? and
  • Will the charity commit the money towards a future event or effort?

The ACNC emphasises that transparency is paramount.

It is important that a charity communicates clearly with supporters and other stakeholders on why it made the decision as well as measures it has in place to ensure that funds are properly refunded or used in line with donors’ original intent and the charity’s charitable purpose.