COVID19

COVID19 Financial Information

March 2020

Government Wage Subsidy.

Not for-Profits (do not have to be registered Charities) are eligible for the government’s crisis wage subsidies. They are subject to the same criteria as businesses.

How does it work?  The subsidy application form can be found here. No evidence has to be submitted on application other than a declaration that your income has been affected by 30% and that you have taken steps to mitigate the loss. Fraudulent claims can be prosecuted later – presumably there will be some sample-checking of applications in the coming months. The money cannot be used for anything other than paying wages and salaries. This means this funding must be tracked in your accounting system against the specific employees you are receiving funding for.

To submit the application, you will need names, IRD numbers and dates of birth of the employees you are claiming for.

There is no GST on the COVID wage subsidies. GST must be paid on all other existing wage subsidies you might be receiving.

The subsidy is not available for people you employ as external contractors.

Business Cashflow Measures

These are all run through the income tax system and have no effect on tax-exempt not-for-profits.

Funding

Of the main grant makers, only the former Community Trusts (Rata, Foundation North etc) are directly affected by the plummeting financial markets and the overall economic situation. Rata Foundation and Foundation North have both advised that they are expecting to continue funding at current levels, and take a long-term view to their investments.

Funding from some gaming trusts (Pub Charity, Southern Trust, Mainland Foundation and many others) will be affected in the short term, as they do not have any revenue while venues are closed. Note that this applies during risk level 3 as well, which we are likely to revert to after this lockdown.

Overall, gambling, including Lotto, tends to be not affected by economical uncertainty, and these funding streams should not be significantly affected by the crisis in the medium or long term.

If you are 30% or more dependent on gaming machine grants from such funders for your general operating costs, you have a case for a government wage subsidy.

The NFP Sector after COVID

March 2020 – Opinion

by Harald Breiding-Buss

Predictions about what the future will look like are almost always spectacularly wrong, so I will try not to make any. I doubt that any organisation had ‘global pandemic’ in their risk management plan, or health & safety policy, yet here we are. This in itself is a good reminder about the limits of forward planning.

The consensus here at CCA is that there will be difficult economic times ahead that will not stop when COVID is either beaten or has run its course. And, as always when times are difficult economically, the NFP sector plays a crucial role in softening the brunt and holding things together. The government’s coffers are not unlimited: benefit cuts are only ever discussed when unemployment is high and the tax take is low. Very many people are now paid for doing nothing, and this money is (partly) borrowed from the future.

The NFP sector – through sports, arts and all sorts of non-commercial activities – allows us to interact with each other without commercial motive, and acts as a role model for the idea of looking out for each other, no matter how difficult an individual may actually make that for us on occasion.

While philanthropic and charitable funding streams are unlikely to be majorly affected, the income that NFPs generate themselves will be, which in turn means there will be more competition for funding. NFPs will have to do more for less – and we’ll have to be kind to each other as well.

This probably means that more NFPs will get into financial trouble, which is where we come in. Now’s the time to seriously consider what will happen if your income streams are reduced by 30% not just for the next month or three, but for the next year or two. Remember, we’re here to help not just with your end-of-year stuff, but budgeting and all sorts of financial advice as well.

Financial Reporting and Audit in COVID Times

May 2020

Some legislative changes are being made at the moment, which allow registered Societies to defer their financial reporting and audit or review.

The Charities Act and Financial Reporting Act are not being amended, meaning that no relief is given to registered Charities in terms of the annual return. Any delay in reporting needs to be approved by Charities Services (Department of Internal Affairs) and is at their discretion. Financial reports still need to be fully compliant with accounting standards.

Many charities will also have to have additional notes regarding ‘events after balance date’.

Organisations that have claimed the wage subsidy will have to be prepared to show their calculations about their entitlement for this subsidy to their auditor or reviewer. This is because an auditor needs to assess the possibility of this being a liability, if it was claimed in error.

Remember that for the vast majority of not-for-profits, audits or reviews are entirely voluntary, although possibly written into your constitution or rules (which can be amended). This may be the time to have a serious think about whether to continue spending money and time on this.