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Sector Focus: The challenges facing faith charities as emergency measures become the norm

02 Nov 2020 Expert insight

This content has been supplied by a commercial partner.

 

In March, the UK was hit hard by the Covid-19 pandemic, and with a second spike and another potential lockdown looming, many religious charities are thinking about how lockdown measures, which were previously considered “emergency”, have become more of a norm. On top of the more operational challenges such as keeping places of worship open, delivering services in a safe and secure way, and balancing the budget, trustees must now also think about how emergency measures in the areas of governance and financial process can evolve into mainstays.

What to consider

When prioritising these new responsibilities, for both trustees and staff, it is important to consider, perhaps with a debrief, whether the charity remains effective and compliant with documented procedures and policies that were in place prior to lockdown. It may be that this debrief highlights where more permanent changes to the documentation is required, and this should be approved by the trustees. The most important of these considerations is likely to be a review of trust deeds or articles.

Many faith-based charities have been in existence for decades, and in some cases, we are seeing constitutional documents that contain narrow objects. Whereas in “normal” times these may have been considered adequate, resulting in a lack of urgency to modernise, the pandemic has led to the need for trustees to be agile and also responsive to the needs of the local community and the practical constraints on the charity. A few areas that are important to review are:

1. Many places of worship raise money or use their own funds to support the local community by way of donations. If the type of entities requiring support changes due to the pandemic, there may be a need to take legal advice if there is any doubt that the charitable payments made are within the objects of the charity.

2. The pandemic has made face-to-face meetings impossible for many, and alternative methods for communication, such as Zoom meetings, have been used. Where these meetings are being used to pass significant and important resolutions, it will be important to ensure:

  • Inclusivity to all those who have a right and duty to participate.
  • Ability under the charity’s constitution to conduct business in this way.
  • Ability to record minutes of the meeting to evidence decisions taken.
  • Agreement by all trustees that virtual meetings are acceptable where face-to-face meetings cannot be held.

There are significant challenges where the size of the board is over 20 and the membership includes those who do not have access to adequate IT. In addition, it is important for the structure of the meeting to encourage debate and discussion as would be the case in a physical meeting.

IT investment

Many faith-based charities, such as congregations, parishes, churches and synagogues, are not likely to have the required level of digitisation of the accounting process, and with sheltering restrictions for many, there is a chance that some have been forced to deviate from their documented procedures. Emails and telephones have replaced paper invoices and signatures, and where in the past BACS or other similar means of payment were made with embedded dual authorisation, this may have been replaced with single person payment. While this may have appeared appropriate for the short-term emergency lockdown, the ongoing programme of working from home is likely to continue, so it is paramount to adjust processes and invest in IT to strengthen controls in response.

It is worth remembering that the main reasons for clearly delineated financial processes are to reduce the risk of fraud, improve the quality of financial information available to trustees, and improve efficiency in the maintenance of financial records.

We are likely to be working from home, if not locked down, all winter, a full year from the start of the pandemic restrictions in the UK. Whereas larger faith-based charities will have cloud-based, IT-enabled processes that mirror that within their offices, the small and medium charities will still be reliant on paper-based filing and some manual processes. It is for them that trustees should think about the risks and rewards of reviewing and re-positioning the administrative and finance functions to ensure they are fit for purpose for at least the next six months, perhaps longer. These changes may require significant investment, but will ensure processes are secure during lockdown and beyond. 

Adam Halsey is a partner and head of faith charities at haysmacintyre

 

 

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