The COVID-19 outbreak has proved crippling for both the global and social economy. But, despite an unheard-of support package to protect the jobs and income of many, our Policy Lead Will Thomson explains why the Government must go further in their support for civil society.
Over the past fortnight, we've seen the Government take unprecedented steps to address the social and economic impacts of the COVID-19 pandemic. With the economy effectively on lockdown for the foreseeable future, the state has intervened in ways that were unthinkable even a month ago: from providing cash grants directly to affected businesses, to covering 80% of the wages of employees and the self-employed alike.
However, there are some real and pressing concerns about the extent to which charities and social enterprises can access this support. As an example, let's look at the grants that are being offered to support small businesses during this crisis.
The Government has set up two separate grant funds to support businesses affected by the social distancing measures brought in to stop the spread of COVID-19. The Retail, Hospitality and Leisure Grant Fund (RHLGF) will provide £25,000 cash grants to retail, hospitality and leisure businesses operating from smaller premises with a rateable value of between £15,000 - £51,000. Additionally, the Small Business Grant Fund (SBGF) provides a £10,000 grant to businesses that already pay little or no business rates because they receive either Small Business Rate Relief of Rural Rate Relief.
A grant like this would be of significant help to charities and social enterprises. What we, and other social investors, are hearing from our customers is that there is an urgent need for easily accessible, flexible working capital. Most charities and social enterprises do not have large reserves to keep them afloat after their income streams have dried up. Crucially, the demand is for grant funding - not repayable finance. Under the current circumstances, taking on additional debt is not an option for these organisations, who instead need to focus on their immediate cash flow issues.
However, as things stand, many charities and social enterprises will not be eligible for these Government grants. A recent survey of our customers found that over 75% of them did not meet the eligibility requirements for either RHLGF or SBGF - despite receiving some relief on business rates through charitable or discretionary rate relief.
This is most likely an unintended oversight, but will mean that an alarming number of charities and social enterprises - organisations that provide vital front-line services to support some of the most vulnerable - could end up closing their doors forever as a result of COVID-19. Without further Government support, many of the organisations we work with will be unable to cover their staff or operational costs in three to six months – action is needed now.
At SIB, we are gathering COVID-19 crisis data across our whole portfolio and assessing the levels of organisational risk, taking steps to ensure that all our customers can get the funding and support they need. We are also looking at how we can harness social economy data to identify those communities most at risk from this crisis and exploring the ways in which we can target finance to those areas most in need.
These issues are not isolated to our customers - we are seeing similar trends across the whole sector. NCVO and others have been doing excellent advocacy work with the #EveryDayCounts campaign on social media, urging the Chancellor to provide a comprehensive support package for charities and social enterprises that have been hitherto left out. We hope that the Government is listening.