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2. Funding and finance

Published: 30/03/2020
Updated: 04/02/2021

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.

Job Retention Scheme extended

The Coronavirus Job Retention Scheme (CJRS), also known as the Furlough Scheme, has been extended. The scheme was initially due to expire at the end of October and was first extended until December following announcement of a four-week return to ‘lockdown’ in England. However, due to uncertainty about how the scheme applied to other parts of the United Kingdom it will now run until the end of April 2021.

The CJRS pays 80% of an employee’s salary where they cannot work due to COVID-19. This is known as furloughing. The UK Government intends to review the scheme in January to decide whether employers should be asked to make a greater contribution, depending upon the economic circumstances.

SCVO has 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. Key details are:

  • to be eligible, an employee must have been on the payroll by 23:59 on 30 October
  • employees need not have been furloughed before to qualify for support in November
  • flexible furloughing remains possible provided that an employee is furloughed for a minimum of seven consecutive days
  • employers can choose to top up wages

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 CJRS can be found on the Gov UK website. Although at present the announced return to ‘lockdown’ only applies to England, the CJRS is applicable in Scotland.

The end date of the CJRS will be kept under review depending upon how long the ‘lockdown’ lasts. The Job Support Scheme will be introduced following the end of the CJRS.

 Job Support Scheme

The Job Support Scheme (JSS), announced by the Chancellor on 24 September and due to replace the CJRS on 1 November, has been postponed following announcement of the extension of the CJRS.

The Job Support Scheme will now come into effect when the Coronavirus Job Retention Scheme ends. 

The JSS 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.

At the time of the JSS announcement, to be eligible staff must have been employed since 23 September 2020 but that date is now likely to be subject to change. Staff 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 a date to be announced when the schemes goes live.

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 important for your charity. They are the unrestricted funds that are readily available to spend. They do not include any restricted and endowment funds, any money that is tied up with your fixed assets or ongoing programmes or funds you have designated for another purpose. 

Reserves are important in terms of good financial governance and to ensure that there is some built-in resilience or sustainability for the charity. For most charities, the development of a reserves policy (no matter how simple) and the regular review of the policy is an important governance process. The policy will be clear about why a charity has a particular level of reserves and what the level of reserves is that the charity needs to build in resilience for the organisation.

What often makes a conversation about reserves difficult is the fact that different kinds of charities will need different levels of reserves. If you are a large organisation with a large number of vulnerable beneficiaries dependent on your services, then you will probably need a proportionately greater level of reserves than an organisation that is small, has minimal (or no staff) and is not directly offering services to vulnerable beneficiaries. Reserves are often thought about in terms of how many months’ worth of the charity’s expenditure need to be kept ‘in case of a rainy day’, but there is no rule about how many months that needs to be.

The resilience that reserves offer is meant to be there to sustain the organisation at difficult times. This is a very difficult time. You may, therefore want to look at whether you should be using some of your reserves to help you continue to deliver your charitable activities at this time. 

Here are 8 things you should think about in terms of reserves.

  1. What is your current level of reserves? Make sure you have up to date information on this. If you are not sure how to calculate your reserves, please see section 1 of our reserves factsheet.
  2. What does your reserves policy say? Understand what the policy means in practice for your charity so that you can make an informed decision about using any reserves. Consider if there are aspects of the policy that you might want to rethink because of the particular situation you are in.  If you decide that you need to consider using your reserves now, does the policy make it easy for you to free up money for other day to day activities? 
  3. Should you also be thinking about using designated funds? You may also wish to look at any designated funds that the charity has and whether retaining these funds remains the right choice for the charity. Designated funds are a portion of unrestricted funds that the charity trustees have set aside for a particular purpose.  Because the charity trustees have made the designation, it is in their power to change how these funds are used.
  4. How much can you afford to spend? Neither charity law nor OSCR set out a minimum amount a charity must retain in reserves. However you should consider the long-term financial position of the charity when deciding how much you can use now. This is an important decision, so make sure the trustees have a good discussion. Bring in someone with relevant skills to help if that would be useful.
  5. What would it mean for your charity if you used reserves now? Using reserves now may help in the short term but if your reserves policy included accumulating funds for new initiatives, opportunities or other projects, using funds now means it may not be possible to do this in the future.
  6. Have you considered other funding opportunities? If your charity requires funds to help it deliver its activities, have you explored all of the support schemes available? You might be able to use a combination of these funds alongside using some of your reserves.
  7. Are you putting what is in the interests of your charity at the core of your decision-making? Try to balance the current situation with what it might mean for the charity in the future, always making sure you are thinking about the best interests of the charity. 
  8. Are you recording your decision-making appropriately? Record why you made the decisions you did, both in terms of any decision to use reserves now and any changes you have chosen to make to your reserves policy.


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.