Guest Blog: Charity CEO Reflections in Scotland During Week 8 of Lockdown

This guest blog is brought to you by Julie Hutchison from Aberdeen Standard Capital who summarises the key themes which emerged during ACOSVO's Week 8 CEO Check-In During COVID-19.

ACOSVO has been hosting weekly CEO zoom calls since the Covid-19 crisis took hold. Once again I joined the, which this week had a focus on grant-makers and insight from funders. This blog summarises the key themes which emerged.

 

Grants as a vital source of support

The Third Sector Resilience Fund and the Wellbeing Fund are just two examples of how funding is being made available to the sector now. Further schemes from independent funders are in development, and the nature of the criteria was discussed. These may look to the medium and longer term, beyond the short-term crisis support which has been a focus in the initial two months. Funders are monitoring what government support is available to charities, to avoid duplication in their own activity. The question of the domains of public and charitable, and what should be delivered/funded by each, has been aired in most of these CEO zoom calls so far.

 

Reserves: prudent or a problem?

The thorny question of reserves came up. It’s typically a sign of responsible decision-making, when a charity’s accounts show money set-aside as reserves. That’s the emergency money which could be used, for example, to fund the organisation when all other sources of income dry-up. In the worst case scenario, reserves might be spent on an orderly winding-up of the charity. Reserves are often described as covering a particular number of months of expenditure.

 

How reserves look to funders is another question. There was some concern expressed that responsible charities are being penalised, and find they are unsuccessful in applying for funding, where they still have reserves intact. It also points to the risk of a second wave financial crisis for charities around August/September of this year, when charities which had six months of reserves find these run out. For charities which ‘did the right thing’, to build resilience into their finances and who are currently surviving by spending their reserves, it is uncertain what support will be available in August/September. Some CEOs are reflecting that their charities are not necessarily being rewarded for good governance and financial prudence.

 

Mind the gap

Looking ahead to the type of funding which will be needed in the medium term, social distancing is a key issue which will impact the finances of charities in different ways. For place-based charities in particular, the gap required between people (likely resulting in smaller group sizes when we can gather again) also equates to an income gap. There are many organisations which previously were less reliant on grant funding and had successfully diversified their income, taking an entrepreneurial approach to income generation from their premises to deliver activities and support for beneficiaries from a property. Many will have less flexibility to reduce their operating costs, but would be unable to generate the same income when re-opening due to social distancing requirements. Outdoor activity centres, heritage buildings offering events spaces, specialist play centres, youth hostels and community hubs are all examples of organisations where social distancing will have longer lasting impacts, and where gap-funding will be critical for survival.

 

This week’s closing quote is from a CEO who offered a new way of defining the sector:

“We’re the people and planet sector, not the third sector.”

 

Aberdeen Standard Capital is a corporate partner of ACOSVO