Bates Wells Briefing for Charities & Social Enterprises|5 May

Bates Wells highlights

Charities, Social Enterprise

See here for our most recently updated (1st May) Briefing on the Coronavirus Job Retention Scheme – this is based on information and guidance issued by the government as at 30th April 2020, including the 30th April updated version of the guidance for employers “Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme” and “The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction” dated 15th April 2020.

In this briefing “Key considerations for restructuring Social Investment transactions during the COVID-19 crisis” Bates Wells’ Louise Harman and Luke Fletcher consider how borrowers and lenders might adjust their terms in order to manage investments and preserve social impact objectives.

At a glance

Registered charities are now eligible for the Coronavirus Business Interruption Loan Scheme – as it has been confirmed they are exempt from the requirement that 50% of the applicant’s income must be derived from its trading activity.

Charities may also be eligible for a new government Bounce Back Loans Scheme.

The Charity Commission has published an updated version of its Regulatory and Risk Framework. 

Since 1st May, the VAT zero rate applies to the supply of electronic publications.

Coronavirus – government support

Business Interruption Loan Scheme

Civil Society Media reports registered charities do not now need to show that half their income comes from trading to be eligible for the Coronavirus Business Interruption Loan Scheme.   On 29 April, the British Business Bank, which is overseeing the scheme, updated its terms and conditions to state: “Charities are in principle eligible if they satisfy the other eligibility criteria of the scheme. “Note: registered charities are exempt from the requirement that 50% of the applicant’s income must be derived from its trading activity”.

New loan scheme  

This week the government has launched a new Bounce Back Loans Scheme which is a 100% government backed loan scheme for small businesses. This scheme will provide loans of up to £50,000 to small businesses affected by the pandemic. The loans will be for up to 6 years and will be interest free for the first 12 months.  The government announcement says that the loans will be easy to apply for (online) and should reach businesses within days. 

Small Business Grant Fund 

The Charity Tax Group has prepared a briefing for government officials proposing that the eligibility criteria for the Small Business Grants Fund be amended to allow charities to make a claim where they would be have been eligible to claim for Small Business Rates Relief, had they not claimed mandatory charity business rates relief.  Under the current rules, you need to be in receipt of Small Business Rates Relief (or Rural Rates Relief) in order to claim: charities won’t typically claim this relief as they will be taking advantage of the mandatory charity relief, which puts them at a real disadvantage here.

Retail Hospitality and Leisure Grant Fund 

Charity Tax Group is also reporting that Local Authorities are reportedly telling charities that the Government has requested that all these grants are paid by 30 April 2020.  Even though CTG doesn’t believe this is actually a hard deadline, it is encouraging charities eligible for the grant to process their claim as soon as possible, noting that in some cases local authorities may have been sending relevant information to charity offices which are closed. 

£400,000 has been redirected to provide emergency support to hard-hit community radio stations. Funds are to be made available to successful applicants within weeks.


The Department for International Trade is to host a series of coronavirus webinars which will offer practical advice to SMEs and focus on issues businesses trading internationally are facing.  Topics covered will range from managing distribution of supply chains and the movement of goods, to support for selling online overseas.  Businesses can register via where all recorded webinars are hosted.

Coronavirus – other sources of funding

Charities Aid Foundation has issued a briefing paper, Unlocking further giving in the UK to support civil society at a time of crisis recommending immediate and medium term steps for government and private funders to ensure charities can continue to support communities during and after the pandemic. Recommendations include removing Gift Aid declaration requirements until the end of 2021, a COVID-19 big philanthropy pledge and encouraging foundations and charitable trusts to spend-down 10-15% of endowed assets.

See under social finance below. 

Coronavirus – impact on the sector

The Resolution Foundation has published a report outlining the unequal economic and health risks of the 2019 novel coronavirus disease (COVID-19) outbreak on the UK’s lower paid, female and younger workers. The report, entitled Risky Business, reveals that up to a quarter of lower paid workers operate in sectors that have been forced to close temporarily. In contrast, the figure for the highest paid workers is one in 20. Key workers, who are most exposed to the health risks associated with COVID-19, are disproportionately likely to be female, with employed women more than twice as likely to be in this group as employed men. Nearly two in five of workers aged between 16 and 24 are engaged in “shutdown sectors” and are unable to work from home. They are twice as likely to be working in shutdown sectors as the rest of the workforce. The study also highlights the unequal risks of lockdown exit strategies on certain groups of workers.

Pro Bono Economics and Civil Society Media are carrying out a weekly survey to understand the pressures being faced by the charity sector, and to monitor how things change week to week as the COVID-19 challenge shifts.  See here for details. 

This new blog, by NPC’s Seth Reynolds, emphasises how data modelling tools can help identify second and third consequences of the Covid-19 lockdown in advance, so that we can adapt and overcome.

IVAR has published a third briefing paper, Getting Ready for the Fallout, reviewing the current challenges faced by voluntary, community and social enterprise organisations.

Charity Commission

Updated Risk Framework

The commission has published an updated version of its Regulatory and Risk Framework.

Regulatory case outcome

The commission has issued a press release announcing that it has concluded its regulatory compliance case into the Alzheimer’s Society, finding that the trustees acted in line with their legal duties. The case was opened in February following media allegations about the handling of bullying and harassment within the charity, including the use of confidentiality clauses in settlement agreements. The commission, which has not published a full report into the case, says that it found no evidence that confidentiality clauses used by the charity were designed to or would have had the effect of preventing staff from reporting any whistleblowing, bullying, harassment or discrimination complaint. Allegations reported in the national media around the amount of money paid out in settlements were not substantiated by the evidence the commission saw. The commission is satisfied that there were processes in place to ensure that settlement payments were properly scrutinised and welcomed the launch of a review of the Society’s procedures for staff raising concerns to ensure these meet best practice. It has advised the Society that in making payments, thought should be given to how the decision might affect public trust and confidence in the charity. In the interests of accountability and transparency, the regulator has also advised the charity to explain its decision-making and use of compensation payments in its annual report.

Serious Incident Reporting – Practical Law video

In the second of two video interviews with Thomson Reuters, Mindy Jhittay has provided practical tips on how charities can meet the requirement to report serious incidents. Charities are facing significant challenges in response to COVID-19 and the associated government restrictions. The commission’s guidance says that: “It is ultimately the responsibility of the charity trustees to continue to report serious incidents using our current guidelines, and we will continue to ask trustees to use their judgement in deciding whether an incident is significant in the context of their charity and should be reported to us. We will continue to prioritise those incidents that place individuals at risk, or incidents that have had a significant impact on a charity’s operations and therefore serious harm to the charity’s work.” This includes significant financial loss or impact on a charity’s work, service users or beneficiaries, whether actual or anticipated in present circumstances.

Whilst this video was recorded prior to recent events, it provides a useful summary of practical matters to consider when reporting serious incidents. Mindy gives an example of a serious incident in the #metoo era, explains the potential consequences for trustees if they don’t comply with the commission and discusses the purpose of the regime and what trustees should consider when reporting. She also considers whether reports should be anonymised and other regulators to whom to report.

The video is available to view for free for the next seven days and can be accessed here.  If you have any questions about reporting serious incidents, please contact Mindy using the contact details above.

New Inquiry

The commission has opened an inquiry into the Barry Green Memorial Fund (1000492), due to concerns that there has been misconduct and/or mismanagement at the grant-making charity. The charity’s purposes include rescuing and supporting animals that have been cruelly treated. The charity was previously included in the commission’s previously double defaulters’ class inquiry due to the charity’s failure to file its accounts on time twice. During this work the commission found several other regulatory concerns about the charity’s governance, including potential unmanaged conflicts of interest, and concerns over the charity’s financial management.


The Association of Charitable Foundations (ACF) has published a new report, ‘Strategy and Governance: The Pillars of Stronger Foundation Practice’, on the importance of strategic thinking and strong governance practices for charitable foundations that want to be ambitious and effective with all their resources.

Tax and VAT

Last week it was announced that the implementation date enabling the VAT zero rate on the supply of electronic publications has been brought forward from December 2020 to 1 May 2020. Charities and other organisations that have been using paper based publications rather than electronic versions in order to benefit from the zero rate of VAT will be able to consider the switch from paper to electronic media now, rather than waiting till December.

Bates Wells’ Bill Lewis has written for Charity Tax Group about a recent Upper Tribunal decision that theatrical production costs do not have a link to taxable catering supplies.

See under Fundraising below.


Bates Wells’ Bill Lewis and Susan Shi have written here about a trap for the unwary relating to charities considering refunding donations that allow entry to visitor attractions.



The Department for Education and the Education and Skills Funding Agency have updated their guidance regarding the provision of apprenticeships during the COVID-19 outbreak. The guidance was updated in respect of furloughed apprentices, end-point assessment, functional skills requirements and the issuing of qualification certificates.

Higher education

The Government has announced a range of measures to protect students and the higher education sector from the impact of coronavirus.


The Care Quality Commission has issued a joint statement setting out its approach to regulation during the coronavirus (COVID-19) pandemic – and details of a new Emergency Support Framework.

Social enterprise

The Chartered Governance Institute (ICSA)has  published a new guidance note for share companies on the withdrawal or amendment of a dividend resolution at an Annual General Meeting.

Social finance

Key considerations for restructuring Social Investment transactions during the COVID-19 crisis. Bates Wells’ Louise Harman and Luke Fletcher consider how borrowers and lenders might adjust their terms in order to manage investments and preserve social impact objectives.

Applications are open for the Resilience and Recovery Loan Fund (RRLF), a new loan fund launched by Social Investment Business (with initial £25m funding from Big Society Capital) for social enterprises and charities experiencing disruption to their normal business model as a result of COVID-19. The RRLF has been established to make the existing government scheme (the Coronavirus Business Interruption Loan Scheme) more easily accessible to charities and social enterprises, and offers loans of between £100,000 to £500,000 to eligible organisations.

Emergency fund paused after thousands of charities apply for cash. The Coronavirus Emergency Fund opened on 30 March and applications were put on hold on 5 April, after more than five thousand applications were received in a single week.

Power to Change has launched up to £12 million of emergency support to provide both immediate and medium-term help for community businesses facing a loss of trading income during the coronavirus crisis.

Launch of New Social Impact Energy Grant. Centrica has launched a new not-for profit social impact grant scheme, Energy for Tomorrow (EfT), to support and empower entrepreneurs, particularly those from underrepresented groups, who have concepts and innovations to tackle climate change, lower energy bills, and deliver real impact to people and communities.


The Rugby Football League is to receive £16 million to safeguard its future.


The Ministry of Housing, Communities and Local Government, in partnership with Public Health England, has published non-statutory guidance for social landlords on essential moves in England. It aims to advise local authorities and housing associations on how they can use existing homes that become available during the COVID-19 pandemic and prospective tenants who may be in most urgent need of a move.

The Regulator of Social Housing has written to all small providers (with fewer than 1000 units) about changes to its regulatory approach during the Coronavirus crisis and how to contact them.

Charity Helpline

Charity helpline

We understand the unprecedented issues currently facing the charity and social enterprise sector and firmly believe that there has never been a more important time for us to help one another.

If it would help you to discuss any charity or social enterprise related concerns that you may have, please complete the form in the link below to set up a free 30 minute consultation with one of the team.

We’ll get back to you to arrange a time to talk. If you are an existing Bates Wells client, please get in touch directly with your normal contact.

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Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of May 5, 2020.