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Summer economic update 2020: Charity and not for profit summary

While a number of charities may stand to gain from some of the new measures announced in the summer economic update, it is difficult to imagine that it will fully compensate for the withdrawal of the furlough scheme and the lack of revenue received as a result of COVID-19.

Last updated 8 July 2020

As expected, Rishi Sunak’s July 2020 update was much more about attempting to preserve jobs and supporting short to medium term spending than taxation and balancing the economy. Many big decisions have been put off with the next scheduled event being the October budget, however we could see additional measures both in the interim and beyond as the situation develops and the government continues to react to COVID-19.

How will the summer economic update benefit charities and not for profits?

As we enter the second stage of the response to COVID-19, the Chancellor announced a further £30bn plan to support, protect and create jobs. This support is not just limited to businesses as charity and not for profit organisations will also be able to take advantage of these new schemes. Additionally, charities in the hospitality sector will benefit commercially from the temporary cut in VAT on accommodation, attractions, food and drink .

Furthermore, of direct interest to the charity and not for profit sector are the plans to bring forward capital expenditure in a number of areas including:

  • Schools and hospitals; over the next year £1bn will be invested in the public sector Decarbonisation Scheme through grants to public sector bodies to help them run more efficiently
  • Green Jobs Challenge Fund; for environmental charities and public authorities to create and protect 5,000 jobs involving the natural environment including planting trees, restoring habitats clearing waterways and creating green space
  • Social Housing Decarbonisation Fund; to improve the least energy efficient social rented homes
  • Further Education Estate Fund; bringing forward £200m of the planned spending
  • School estate funding; £560m has been pledged to improve the condition of buildings
  • School rebuilding programme; £1bn funding has been allocated for the first 50 projects

What does this mean for charities and not for profits?

While the measures announced today are not directly aimed at charities, they will to some degree reduce the detrimental economic impact of COVID-19 on the charity sector. As well as the wider benefit from support with staff costs, specific types of organisation will see additional financial and mission-based benefits. For instance, universities, further education and schools will benefit from the accelerated capital expenditure programme and educational charities may be involved in the various careers and guidance measures; the green agenda will further the cause of environmental charities and there may be opportunities to apply for funding for qualifying projects; charities that have needed to furlough large amounts of staff may be assisted by the additional employment support measures and, for theatres in particular, this may tip the balance between survival and closure especially when combined with the Cultural Recovery Fund announced by the DCMS.

Of course, currently most of these plans are set out at a relatively high level and it will be a little while yet before we can fully understand how much help these changes will support any particular organisation and how effective they will ultimately be.

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