Small charities forced to repay over £1m in emergency government Covid-19 funds

Small charities were forced to return more than £1m to the government after running out of time to spend emergency Covid-19 funding, it has emerged.

The National Lottery Community Fund has confirmed that grants worth about £1.3m, which were supposed to help small charities cope during the pandemic, were instead refunded to the Department for Digital, Culture, Media and Sport.

The cash came from the Coronavirus Community Support Fund, a £200m scheme announced by the Chancellor of the Exchequer in April 2020 and administered for DCMS by the NLCF.

The fund was heavily criticised for both long delays distributing grants to charities and restrictions that required all grants to be spent by the end of March 2021. 

Karl Wilding, then chief executive of the National Council for Voluntary Organisations, wrote in May 2020: “Reassurances that funding will be made available soon are starting to wear thin. I have told the government and the NLCF that this pace isn’t good enough.” 

In 2020 Third Sector reported that, three months after CCSF had been announced, only 1 per cent of the promised funding had been released to charities. The money was not fully allocated until November that year, seven months after the Chancellor’s original commitment.

The NLCF accounts for 2021/22, which were published yesterday, show that £1.28m was “refunded to DCMS” from the CCSF. An NLCF spokesperson said: “These returns were grants, or part grants, that could not be spent by the recipient organisations during that financial year and were therefore returned to DCMS as part of the terms of our grant agreement with them, which required that this funding to support communities through the early stages of the coronavirus pandemic was spent during the financial year 2020/2021."

The accounts also show NLCF has returned to pre-pandemic levels of income and spending.

Its income in 2021/22 was £787m, broadly the same as before the coronavirus crisis began in 2019/20. It distributed £579.8m in grants across the UK, which is also in line with spending two years ago.

In 2020/21, when the NLCF was responsible for distributing several one-off emergency programmes for the government in response to Covid-19, its income grew to £1bn and it awarded more than £750m to charities.

Despite this, the number of staff at NLCF, measured as full-time equivalent employees at the end of the financial year, fell only slightly in the past 12 months, from 815 to 788. Overall spending on salaries was £26.5m, unchanged from 2020/21.

The gender pay gap and ethnicity pay gap both shrunk for the second year in a row, the accounts show. 

Women at NLCF are now paid a median average wage 2 per cent lower than that paid to male employees, compared to 2.8 per cent lower last year, while ethnic minority staff are paid 0.7 per cent less than their white colleagues, down from 0.9 per cent.

In November last year, an independent report into concerns about bullying at NLCF said that one in three staff had witnessed discrimination or harassment at the funder

Addressing these findings in her introduction to the accounts, Blondel Cluff, the chair of trustees, said the funder “must not only be seen to adopt values, but to live by them.

“As a public body, the custodian of National Lottery good cause money and a champion of the UK’s dynamic and diverse communities, the NLCF must strive to be the best it can be, adhering to the highest ethical standards in all that it does.”

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