Charity funds – which can I use during Covid?

20th January 2021

During this unforeseen prolonged period of economic downturn charities may need to re-assess their short to long term aims. Certain planned activities may need to be delayed or even cancelled while more crucial expenditure takes priority. Charities may find it necessary to make use of their reserves to cope, or even just survive, this on-going situation.

 

The two main types of reserves which exist are restricted and unrestricted.

 

Restricted funds have conditions attached to them which specifies the manner in which they may be spent, whereas unrestricted funds may be spent at the charity’s discretion. Within unrestricted funds you may also find designated funds, these are unrestricted funds set aside by trustees for a particular purpose.

 

The charity is free to re-allocate unrestricted & designated funds as seen most appropriate by the trustees. However, this may not be possible with restricted funds.

 

Firstly, the charity needs to identify the type of restrictions which have been applied to the individual funds. Those imposed internally may be more flexible than those imposed externally which are less likely to be allow any amendments as to their allocation.

 

If the charity wishes to spend its restricted funds on things other than what its restricted use is, the charity must write to the original donor and get permission to spend the funds elsewhere.

 

Find further guidance and what financial support may be available to you at gov.uk

 

Coronavirus (COVID-19) guidance for the charity sector – GOV.UK (www.gov.uk)

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