Recession Watch

GOVERNMENT SUPPORT

Government Action Plan for the Third Sector

The Government have published their Action Plan for the Third Sector, 'Real Help for Communities: volunteers, charities and social enterprises', on 9th February 2009. CFDG welcomed the Action Plan, which starts to address the sector's needs in these tough economic conditions. We will continue to work with Government to secure the further support which our members believe is necessary.

The Office of the Third Sector (OTS) is running workshops across England and Wales to help third sector organisations get the most out of the Government's support. In particular there will be workshops for those thinking of merger or collaboration.  The presentations from those workshops are now available from the OTS website, and include the Modernisation Fund, the Targeted Support Fund, a Communitybuilders presentation and also one from the Charity Commission.

The headline commitments were as follows:

Commissioning: A £15.5 million Community Resilience Fund will provide grant funding to small and medium providers in our most deprived communities, in areas where demand in increasing. Specifically: employment, legal and financial services, mental health support and support through family breakdown. Typically the grants, which will be available from April 2009, will be targeted at organisations with an income of between £30,000 and £100,000. The engagement of commissioners with small and medium providers will be strengthened through an extension to the National Programme for Third Sector Commissioning. This year will also see a refreshed Compact, and a Joint Compact Action Plan.

Modernisation: A £16.5 million modernisation fund to help with the cost of mergers, partnerships and moves to more efficient sharing of back office functions for at least 3000 third sector organisations.

Volunteering: Up to £10 million investment in a volunteer brokerage scheme for unemployed people with create over 40,000 opportunities for people to learn new skills and give back to communities through volunteering.

Prompt Payment: A national campaign to encourage public bodies to pay all invoices within 10 days, which will improve cash flow for small organisations.

Gift Aid: They are researching Gift Aid for higher-rate tax payers, and should be reporting on their research in Autumn 2009.

Task Force: The Government are convening a three-month task force, where the private and third sectors will work together, focusing on sharing skills and looking at corporate support for the Third Sector.

Business Support: The Government have also reaffirmed that their support for businesses is available to the Third Sector, including the Enterprise Finance Guarantee, the Working Capital Scheme and the Capital for Enterprise Fund.

Pensions: The Office of the Third Sector, the Pensions Regulator and the Charity Commission will work to target information about pensions to third sector organisations, including information on the available flexibility around recovery plans. The Department of Work and Pensions (DWP) is engaged on work around defined benefit pension schemes and their impact on mergers and restructuring. We are expecting a consultation from DWP on this subject during Spring 2009.

Slides from a presentation of 'Real Help for Communities' are now available here PP icon. CFDG's proposals for the Government Action Plan can be found here.

General Government support

The Government has confirmed that their £20bn package of recession support for small businesses will also be available to the third sector. The package comprises of three elements:

Through the Enterprise Finance Guarantee (EFG) the Government will guarantee 75% of a loan, with banks covering the remaining 25%. The EFG is open to organisations with an annual turnover of up to £25m.

Under the Working Capital Scheme (WCS), banks will submit a portfolio of loans to businesses (lending to businesses with turnover up to £500m) to the Department of Business, Enterprise and Regulatory Reform (BERR). BERR will guarantee up to 50 per cent of the value of the portfolio, securing up to £20bn of bank lending.

The Capital for Enterprise Fund (CEF) builds on the announcement in the PBR of a £50m fund to convert businesses' debt into equity. The new announcement means that the Fund will provide £75m of equity, made up of £50m from Government funds and £25m from high street banks. The CEF is open to organisations with a turnover of up to 50m Euros.

Business Payment Support Service: in November 2008 HMRC introduced a helpline to provide specific help where you are worried about being able to pay tax, National Insurance or VAT. It is best to contact them sooner rather than later – you can make arrangements to pay the amounts due over an extended period of time, although you will be charged interest. HMRC Business Payment Support Line: 0845 302 1435. 

SUPPORT FOR MEMBERS

Helplines

The Charities Aid Foundation (CAF) have launched a free, confidential helpline for charities worried about their financial viability. CAF advisors will be giving advice, and referring charities to other sector umbrella bodies, including CFDG, where appropriate. The helpline number is 0800 980 2000.

CFDG members are reminded that we run a number of helplines for members: accounts, investment, IT and legal (you will need to log on to access the helpline numbers).

Publications

Managing in a Downturn: an update of expectations six months on, is available to download.

The first Managing in a Downturn, is also available to download.

Howarth Clark Whitehall have prepared a detailed guide on 'Charities and Insolvency', which is available on the document library.

Our popular Made Simple guides will give you a clear understanding of the basics on all major financial areas. These are also available on the document library. Simply log on, and search for publications entitled 'made simple' in the document library.

CFDG's latest Risk Survey will give you a good idea of the sector's appetite for risk at the time of publication in late 2008. The presentations from the Risk Conference 2008: Staying Alive, are also available, as are the presentations from all conferences and members' meetings.

Our CEO, Keith Hickey, wrote an article entitled, "What did you do in the recession" in June 2008, which provides lots of useful advice on what to keep on top of during difficult times.

Ongoing lobbying

The sector umbrella bodies have come together to pressure the Government into acting on the key areas of Gift Aid and VAT, in light of the current economic climate.

letter Word icon was sent to Stephen Timms, Financial Secretary to the Treasury, and the heads of CFDG, NCVO, Acevo and CAF subsequently met with the minister. Details of the meeting can be found in the joint press release that was issued after the meeting.

SPECIFIC ISSUES

Going concern

The Auditing Practice Board has issued a bulletin on going concern issues during the recession.

The FRC has issued an update for directors who adopt the Financial Reporting Standard for Smaller Entities: Going Concern and Smaller Entities.

Employment

Birdsong Consulting has published a Charity Pulse report, entitled 'Impact of the Recession on Voluntary Sector staff satisfaction'.

The Chartered Institute of Personnel and Development has put together a guide 'How to manage your workforce in a recession'.

RECESSION ADVICE AND NEWS

 
A to Z of recession help

The Charity Commission has launched a campaign called the Big Board Talk, based on the 15 questions that all boards need to be asking themselves at this time.

NCVO and the new minister for the Third Sector, Angela Smith, launched Support in Uncertain Times: Principles for managing in the recession, at the second Third Sector Recession Summit (10th June).

Sandy Adondirack's legal update is listing all the help available from voluntary organisations on the recession.

Recession news

Get the latest news on the recession from the BBC's economy pages.

A report from the Smith Insitute has suggested that charities will see £200m wiped off the value of legacies, thanks to tumbling share and property prices.

Recent news on the recession has included predictions that medium-sized charities would be those hit hardest, their size meaning that they will be too small to cope with large losses and too large to be agile.

Interest rate cuts mean that those charities who rely on investment income will be in a doubly tough position.

Meanwhile, Schroders have suggested that one way for endowed charities to protect themselves during the downturn would be to borrow against their property portfolios.

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