The current coronavirus pandemic is accelerating and undermining many organisations’ key business assumptions. With additional strain on the charity sector to support beneficiaries and provide extra services in times of need, there are further challenges and significant uncertainty for the sector.
We have looked to summarise the practical steps that charities should be looking to take to mitigate the issues and the measures currently outlined by the Government to support organisations at this time.
Key performance indicators
Monitor key performance indicators, notably all significant income streams including cash collection, donations etc to identify any rapidly deteriorating situations. This will ensure you are accurately informed of the impact on your charity and allow you to review the available options to counter any issues.
Many charities may experience a fall in income at a time when services are high in demand. In the current environment preparing a daily receipts and payments cashflow combined with a medium-term integrated forecast is a sensible step. It will allow you to manage cash to mitigate any issues and ensure no short-term funding issues.
Where organisations are aiming to remain operational, review and critically appraise your supply chain. Identify who may be most at risk, the potential impact on your charity through stress testing, and how you could lessen the impact. Such areas may include outsourced operations (e.g. finance) and childcare provision.
Stress test your forecasts for a variety of worst-case scenarios, identify what tools you have to manage cashflow and the key timelines. In a worst case, work out the timelines and cash impact of continuing to operate.
The Government has clearly stated it will take all steps to address the issues to businesses of coronavirus. They have put in place several practical steps to ensure UK banks and HMRC are supportive in the current environment. It is important all stakeholders are engaged with appropriately so that businesses avail themselves of the available resources and reliefs available.
The Charity Commission have provided guidance for organisations and it is important that you maintain the governance of your organisation by regularly reviewing this.
Managing fraud risk
Unfortunately in uncertain times we see an increase in criminal and fraudulent behaviour. Charities are facing tough times ahead with donations levels dropping and so it is even more important that the sector is able to keep strong anti-fraud measures in place.
In a previous article we have outlined some general fraud risks – we recommend you read this first. You will then find below some additional specific fraud risks for the charities sector and suggested behaviours to mitigate them.
|Risk area||Contributing factors||Mitigation|
Increased demand for funding may obfuscate fraudulent claims. Criminals will actively look to exploit expedited and streamlined application processes.
Urgency to process applications may result in due diligence being streamlined.
• Verification processes should be maintained as far as possible, with escalation points utilised where controls are streamlined.
A welcome increase in volunteers will prevent the application of some existing screening processes and may be abused for gain.
|• New volunteers without the appropriate qualifications, status, or with criminal records, will seek to exploit the opportunity to access the organisation whilst screening is pending.
• Criminals may offer assistance to gain access to premises, equipment, money and information.
|• Verification should be pursued to the greatest extent in the time frame available, with checks continuing to progress to completion even post commencement.
• Volunteer access should be suitably controlled.
• Exception reporting should be utilised wherever possible to identify anomalies
As the crisis develops new risks will present themselves. Whilst it is not possible at the moment to fully gauge the risks, it would be worthwhile considering the impact they may pose.
The Government has committed to cover 80 per cent of salaries so that companies do not need to make staff redundant during this period. Individuals are not permitted to undertake other work during this period, however it is not currently clear if overpayments as a result of staff who abuse this benefit could be recovered from the organisation. Find out more here.
It is likely workloads will reduce should remote working requirements exist for sometime. Organisations should ensure that staff are aware of what is expected of them, and identify additional work or projects that can be undertaken to keep staff occupied, with appropriate and regular management monitoring and oversight. Any future investigations of staff dishonestly failing to complete their working hours may be hampered were expectations not expressly communicated. Find out more here.
If you have any questions or would like to discuss in more detail how your organisation can defend against fraud risks during this time, please contact Tim Merritt.