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

2. Funding and finance

Published: 30/03/2020
Updated: 06/07/2020

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

Both the Scottish and UK Governments have set out financial assistance for many sectors. Below are some of the main sources of funding for the charity sector.

Community & Third Sector Recovery Programme

As announced by Aileen Campbell, Cabinet Secretary for Communities and Local Government, the Third Sector Community and Recovery Programme will open for applications later in September. As part of the programme tailored, specialist advice and financial support (grants and loans) will be available. The aim is to help organisations to adapt and change so they can re-open and operate sustainably post-COVID whilst continuing to have a positive impact on people and communities. This is being delivered by Firstport, Corra Foundation, SCVO, Just Enterprise, Community Enterprise, and Social Investment Scotland. Further information about this part of the programme will be available from this website later in September. If organisations are interested in receiving updates on this aspect of the programme including when it opens, eligibility and criteria, you can do so by signing up for the SCVO Coronavirus Third Sector Bulletin.

National Emergencies Trust (NET)

The NET is co-ordinating the National Emergencies Trust COVID-19 Appeal across the UK. In Scotland the funds will be managed by Foundation Scotland.

Charities Aid Foundation 

The CAF Coronavirus Emergency Fund has been set up to help smaller charities affected by the impact of COVID-19. One-time grants of up to £10,000 are available to help organisations survive during the current health emergency.

Small Business Support Grant

This Scottish Government grant up to £10,000 is available to those who have applied for Charitable Rates Relief but are eligible for the Small Business Bonus Scheme which provides non-domestic rates relief. This scheme will close for new applications on 10 July.

Resilience and Recovery Loan Fund

The Resilience & Recovery Loan Fund (RRLF) is a new fund for social enterprises and charities across the UK who are experiencing disruption to their normal business model as a result of COVID-19. It has been established to make an existing UK Government scheme (the Coronavirus Business Interruption Loan Scheme) more easily accessible to charities and social enterprises.

Independent Funders 

See the SCVO Hub for up to date information on COVID-19 specific funds from independent funders.


Wellbeing Fund

Currently closed - The latest round of funding applications closed at noon on 22 May 2020.

The Scottish Government’s Wellbeing Fund will support organisations across the third sector that are providing important services for people as a result of coronavirus. Find out more at the SCVO Hub

Third Sector Resilience Fund

Currently closed - The latest round of funding applications closed 11 September 2020.

This emergency fund is for charities, voluntary organisations, social enterprises and community groups in Scotland. The fund is designed to support charities that are in financial difficulty due to COVID-19 and aims to provide some financial stability. 

To be eligible you must:

  • Be a charity, voluntary organisation or social enterprise based in Scotland and/or primarily delivering services/activities in Scottish communities.
  • Have been providing activities and/or services before March 2020.
  • Need the funding directly as a result of the impact of COVID-19 and Scotland’s national precautionary measures.
  • Be applying for funding to help with your short term cash flow position.
  • Know how much your monthly outgoings are and the anticipated value of income loss over the next six months (ballpark figure).
  • Know how much funding from you will need to keep your organisation afloat until the end of July 2020 (ballpark figure).

Full details of the fund and how to apply can be found on the SCVO website.

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.