Blog: Why charities are important during this crisis and need help

Kevin is pictured with weatherman Derek Brockway at Pedal Power.
When representatives of UK Charities appeared as witnesses before the first ever virtual meeting of the Digital Culture Media and Sport Select Committee this week it wasn't the first time I'd heard the sector's pleas for help in a crisis.

At the time of the great financial crash I was Gordon Brown's Minister for the Third Sector, based back then in the Cabinet Office. It became clear to me at that time that in a severe economic downturn charities face a different dilemma to business. When the economy tanks most businesses are hit by a fall in revenue due to falling consumer demand.

It's true that charities also lose revenue in an economic downturn, as consumers tighten their belts and reduce charitable donations. Charity begins at home when family cash is short, and the Coronavirus crisis is even worse because charity shops cannot trade and fundraising gatherings can't be held. At the select committee Karl Wilding of NCVO told us the sector expected to lose £4bn, or a third of revenue, in the next 3 months.

But unlike many businesses the demand from communities for charities' services actually increases at a time of economic crisis; even more so when it is also a public health crisis hitting the most vulnerable the hardest.

Recognising this back in 2008/9 I worked with charities to devise a £42.5m Third Sector Action Plan called Real Help Now.  The idea was to assist the sector through the crisis not just with a hand out but a hand up, with support for modernisation, resilience, volunteering and social enterprise.  The Government also pledged that the public sector would pay its bills on time to charities which deliver large swathes of public services for national and local government, including the NHS.

But today's task is on a scale much greater than even the great credit crunch, and the Chancellor Rishi Sunak needs to act fast.  Too often charities are an afterthought when they are in fact central to resilience and recovery.

So what is to be done? Here are a few ideas.

Firstly where charities have to furlough staff due to lack of funds an exemption should be made to allow front line workers in the community to continue to volunteer.   This is not an abuse as it might be where a business is trading while the Government is paying much of the wage bill, but rather one way that we can continue to help the most vulnerable while helping charities to survive.

Secondly a significant UK wide ‘Stabilisation Fund’ is needed from the Treasury with charities expecting to lose at least a third of their income in the next 3 months. Perhaps the new National Emergency Trust could be rapidly endowed as a vehicle to distribute relief to charities. At the committee we were told it currently only has £11m in it. This would enable charities to stay afloat and continue operating during the course of the pandemic and beyond.

Thirdly the Chancellor should provide an exemption to the 50% trading activity requirement under the Business Interruption Loan Scheme so that many voluntary organisations can benefit too and have a bridge to the future.

Fourthly  there should be specific additional funding for organisations that are working on the front line and directly contributing to tackle the impact of the coronavirus.

Back in 2009 I said, "The third sector is brilliant at knowing how best to provide real help for people who need it most. We need to make the most of the skills and expertise the sector has to offer - helping people through times of challenge and change, finding new and more equitable ways of doing business through social enterprises, and empowering people to transform their lives and their communities. That's why we are acting to invest in helping the third sector get stronger now and in the future.'

Those words are truer than ever at a time when charities, social enterprises and credit unions are at the front line of the fight of our lives. The government must recognise this and act with urgency.