A coalition of civil society bodies is calling on the government to divert surplus local authority coronavirus funding to small charities.
The bodies, led by the Charity Tax Group along with NCVO, NAVCA, the Small Charities Coalition and others, have contacted the Treasury and the Department for Business, Energy and Industrial Strategy about reforming the Small Business Grant Fund scheme.
Under this scheme, one-off £10,000 grants are available to small companies in England, via funding sent from central government to local authorities.
Charities are currently unable to apply to the scheme, which is only open to firms which already receive small business rates relief. No organisation receiving charity business rates relief can also claim small business rates relief.
The CTG argues that this has left charities at a “serious disadvantage” compared to similarly-sized small businesses, and has asked the government to reform the rules so that charities can qualify.
No need for new money
The coalition’s analysis also suggests that any reform will not require new money from the Treasury. CTG says that local authorities have not spent the entire £12bn budget allocated for small business grants, and have identified around £4bn in total surplus which may need to be sent back to Whitehall if it is not paid out locally.
“Sufficient funding is currently held by local authorities and could be distributed quickly to charities in desperate need of a financial stimulus,” CTG said in a statement.
Under the proposed reforms, the government would waive the need for organisations to receive small business rates relief in order to receive a coronavirus small business grant, provided those organisations met the other criteria related to the number and rateable values of their properties.
The coalition is commissioning a survey of small charities to better understand the costs of the proposal, but has shared with officials some local authority figures which show the likely surplus from which charities could benefit in different parts of the country.
John Hemming, chair of CTG, said: “Small charities have expressed frustration that the £10,000 Small Business Grant Fund is only open to organisations claiming Small Business Rates Relief and not those claiming mandatory charity rates relief.
“This is despite the fact that many small charities have properties of an equivalent size and have been equally affected by the Covid-19 shutdown and the associated loss of income.
“CTG, working with sector partners, has proposed a tweak to the current rules to allow small charities to claim the grant. With current allocation of the grant funds lower than anticipated by government, this pragmatic step could deliver urgent financial stimulus to small charities, at no extra cost to the exchequer.”
A Treasury spokesperson said: “Our grant schemes for small businesses are linked to the business rates system, which allows local authorities to issue funding to those that are likely to face high fixed costs, as soon as possible.
“Those that aren’t eligible for grant funding can still make use of the government’s unprecedented package of support.
"This includes our new bounce back loans, which provide eligible applicants with quick and easy support that is interest free for the first 12 months, as well as the coronavirus job retention scheme and other measures such as protection from eviction and income tax deferrals”.