Please click here to read OSCR’s COVID-19 Guidance for Charities

2. Funding and finance

Published: 30/03/2020
Updated: 28/09/2020

At this time, funding for the charity sector is even more critical than normal. We will update this guidance as the situation develops.

Updated 7 October 2020

Below are some of the main sources of Covid-19 related emergency financial support available for the charity sector in Scotland.


Scottish Government Funding

On 2 September the Cabinet Secretary for Communities and Local Government announced a new £25 million Community and Third Sector Recovery Programme which is open for applications until March 2021. The programme has two strands:

  • The Adapt and Thrive Programme offers tailored, specialist advice, grants of £5,000 - £25,000 and /or interest free loans of £25,000 - £250,000 to organisations operating in areas or with people who have suffered disproportionately for the effects of Covid-19.

  • The Communities Recovery Fund gives grants of £5,000 - £25,000 (or partnership applications of up to £75,000) to implement changes necessary to reintroduce services and activities that have been suspended or severely disrupted because of Covid-19 and/or to delivery new services identified as a priority because of Covid-19.

The Programme is open to charities, voluntary organisations and social enterprises. Applicants must be corporate bodies (companies, SCIOs, registered societies). Unincorporated charities can access support by partnering with a corporate charity. Applicants must be based and providing benefit in Scotland and must be allowed to operate under Scottish Government guidelines. Full details on eligibility and how to apply can be found at the SCVO Coronavirus Third Sector Information Hub.

Former Scottish Government schemes including the Third Sector Resilience Fund and the Wellbeing Fund are currently closed to new applications.


National Emergencies Trust (NET)

The NET is no longer actively promoting the National Emergencies Trust Covid-19 Appeal but it is still accepting donations. In Scotland the funds are being managed by Foundation Scotland and grants of £1,000 - £5,000 are available to charities and constituted community groups through its Response, Recovery and Resilience Fund. At present the Fund is prioritising applicants planning for recovery as lockdown measures ease.


Charities Aid Foundation (CAF)

The CAF Coronavirus Emergency Fund makes one-time grants of up to £10,000 to smaller charities to help them survive during the pandemic. To date it has paid out grants exceeding £6.4 million. The CAF website has also complied information about other funding opportunities.


Resilience and Recovery Loan Fund (RRLF)

The RRLF is a new fund being administered by Social Investment Business with £25 million made available from Big Society Capital. The fund supports charities and social enterprises experiencing disruption to their normal business model as a result of Covid-19. At present the fund is due to close to new applicants on 13 November and applications are considered on a first-come-first-served basis. The closing date is being kept under constant review.


Independent Funders

The SCVO Coronavirus Information Hub has up to date information on a wide range of Covid-19 specific funds from independent funders.

Staff and the job support scheme

On 24 September the Chancellor announced the job support scheme which will replace the coronavirus job retention scheme from the beginning of November. The new scheme will run for six months.

It will be open to all charity sector employers across the UK that have fewer than 250 employees, including charities that have not previously furloughed staff. Larger charities may also be able to benefit if they can provide evidence that they have lost revenue as a result of coronavirus

The job support scheme is designed to support viable jobs. Under the scheme an employee must work and be paid by their employer for at least one third (33%) of their normal working hours. Of the remaining two-thirds (67%) the UK Government will contribute one third (22%) and the employer must contribute a further one third (22%).  This means that employees will receive at least 77% of their normal pay.

The Government’s contribution is capped at a maximum of £697.92 per month. As with the previous scheme, the Government will reimburse employers after the work has been done.

To be eligible, staff must have been employed since 23 September 2020. They can move in or out of the scheme flexibly but each working arrangement must last for at least seven days.

Employees cannot be made redundant or given notice while their employer is making a claim on their behalf through the scheme.

Additionally, employers will receive a £1,000 job retention bonus for each employee they retain in employment until at least the end of January 2021.

On 20 March the Chancellor announced the coronavirus job retention scheme which covers charity sector employers across the UK. The scheme has closed for new applications. 

The scheme pays 80% of an employee’s salary where they cannot work due to COVID-19. This is known as furloughing.

The UK Government contributions towards the scheme will reduce until the scheme closes, currently planned for the end of October. See the UK Government announcements for more detail on how the scheme will work until the end of October.

SCVO have specific advice for charities on the job retention scheme. This includes information for charities who receive continued public funding for staff costs.

The job retention scheme pays up to a maximum of £2,500 per month. Payments are backdated to 1 March 2020. To be eligible, you must have:

  • created and started a PAYE payroll scheme on or before 19 March 2020
  • enrolled for PAYE online
  • a UK bank account.

As an employer you must confirm in writing with your employee that they have been furloughed. A record of this must be kept for five years.

Details of the coronavirus job retention scheme can be found on the Gov UK website.

Flexible furloughing
From 1 July employers can bring furloughed employees back to work part time and furloughed for the remaining time. This is known as ‘flexible furloughing’, for more information see the UK Government website.

Individual charities will need to decide what hours and patterns employees can work and will be responsible for paying wages for those hours. Working from home is still the default position for many and Scottish Government guidance on easing the restrictions must be followed at all times.

Where possible you can redeploy staff to other roles to help meet the needs of your charity and beneficiaries.

If employees are furloughed they cannot work or volunteer for you, even with flexible furloughing. 

SCVO have information and advice on how to support employees and beneficiaries during this time. 


Some employers will be able to reclaim statutory sick pay paid for sickness absence due to COVID-19. You are eligible for the scheme if:

  • your business is UK based
  • your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

See the Gov UK website for more information.

Many funders are allowing charities more flexibility in the use of funds and reporting requirements.   

SCVO has a list of the main Scottish Funders and links to their COVID-19 statements here.

Reserves are the funds that your charity has which can be freely spent on any of its charitable purposes. Normally you would keep a certain level of reserves; however, these are not normal times and you need to do what’s best for your charity.

As always, it will be important for charity trustees to understand the financial situation of their charity and act accordingly. Where you have reserves then you can use these to help the charity continue to deliver its activities. You should make sure you take account of any plans that the charity had to use those reserves, as it may not then be possible to deliver on those plans in the future. 

Our Charity Reserves Factsheet outlines what a reserves policy is and why you might need one.

In some cases you may be able to use restricted funds for other purposes. This will depend on the restrictions that are in place.    

Restricted funds have been given to your charity for a specific purpose – sometimes to deliver a special project or a distinct piece of work or to be used only for one of your charitable purposes if you have more than one.  The person or organisation giving those funds to your charity has done so trusting that you will use the funds for that reason and no other.  However, they didn’t foresee the situation that we are in now and so it is possible that they may be willing to allow you to use the funds for a different purpose or reason if you are able to contact them to ask them.   It is important for charity trustees to consider whether this is the right thing for the charity in terms of other commitments that the charity has already – for example, contractual commitments both short and longer term.

Sometimes restricted funds comprise donations from many donors and in this situation it is unlikely to be practical to contact them all to ask permission to use the funds differently. Where the charity trustees consider it appropriate in the circumstances, they may wish to think about using their normal methods of communication such as newsletters or their website to inform those donors that they are proposing an alternative use for those funds providing no objections are raised within a set period of time. This would potentially be a pragmatic approach that could be used at this time and which OSCR would respond to proportionately where necessary.   

If the restricted fund has been created by a single donation and it is not possible to contact the original donor or funder to discuss alternative use then you should not use those restricted funds as there is no means of the charity trustees addressing the trust that the original donor placed in the charity.  

We encourage charities that are looking at options for using restricted funds to help them in the current situation to be sure that the funds are definitely restricted and not designated as the two are quite different. 

  • Restricted funds occur where a third party has placed a restriction on the use of the fund.
  • Designated funds are where the charity trustees have chosen to set aside some of the unrestricted funds of the charity for a specific use – for example a repair fund to ensure there is money available to keep a building in good condition.

If charity trustees are in doubt, they should consider the paperwork that they have to support the restriction. Auditors and independent examiners to charities may also be able to assist with some of this as they will have had an interest in ensuring the funds are correctly described in the charity’s accounts and so may have copies of supporting documentation on their files.

Charity trustees should carefully consider what actions are in the best interests of the charity in this situation and act accordingly, documenting decisions that they reach and the reasons for those decisions as a matter of good governance which is still very important in this situation.