Experts predict the financial crisis triggered by Coronavirus to have an enormous impact on world economies. Since no one can be certain how long the virus will impact global businesses, predicting the recession’s scope is impossible, but experts agree that it will be steep and unprecedented. 

Not-For-Profits (NFPs) have not been spared and we can even say that they have been badly hit in terms of financial support reduction and resource allocation. The not-for-profit sector can assume that their fundraising will be more challenging during the financial crisis. During the 2008/2009 recession, giving in the UK fell by 11% overall, according to the Charities Aid Foundation. About half of the charities the Foundation interviewed in Q2 of 2020 had already begun to seek out emergency funding to survive the crisis. 

Government aid is available

Governments around the world are responding to the crisis in different ways. Many have earmarked funds for the nonprofit sector, and some have established new rules to enable not-for-profits (NFPs) to raise funds directly from the public as well. For example, the UK has pledged £750 million to voluntary, community, and social enterprise organisations to continue their work during the coronavirus outbreak. Much of this support is earmarked for coronavirus health responders, but there are funds available to other sectors as well. Russia has declared a tax holiday for NGOs providing social services. Canada and the United States are both offering low-interest loan programs and lending guarantees to not-for-profits and social enterprises. Both nations also have support available at the state or provincial level. 

Other funding sources

The civil society — private enterprises and private as well as institutional donors — have been in the front line to help NFPs meet their challenges during these hard times. In Egypt, for instance, government hospitals appealed to the private sector for Ramadan donations to alleviate some of the expense of COVID treatment. The general public seems to feel a strong desire to give at this time, and donors who haven’t lost income due to the virus are willing to support causes that can show a need. This is especially true if an organisation can demonstrate a need that is related to COVID-19. In a recent survey, 57% of respondents agreed or strongly agreed that charities should engage in fundraising during the crisis, so NFPs shouldn’t hesitate to ask donors for funding at this time. 

Managing volunteers

Demand for volunteers is skyrocketing, and people are stepping up to provide the help needed during this period of hardship. When the NHS announced a need for volunteers back in April, over 750,000 people signed up in just four days. 

However, NFPs need to ensure that they are providing sanitary and environmental conditions that protect volunteers. Volunteers, like paid staff, need:

• Clear information about safe practices
• Options to work remotely, where possible
• Socially distanced workspaces
• Sanitary workspaces
• Flexible shifts
• Encouragement to stay home if they are not well

The role of the NFP board

NFP board members will have to manage several responsibilities in order to sustain their activities through the crisis. They may need to:

• Assess the needs of the populations they serve
• Find ways to safely and effectively deliver services during the pandemic
• Keep volunteers and employees safe while maintaining services
• Reengineer the organization’s purpose or programs, if necessary

A research project by the Centre for Social Impact and Philanthropy found that nonprofits of all sizes in India are struggling to cope with the pandemic in terms of adjusting to digital platforms, losing progress on their existing programs, and dealing with the financial stress that the pandemic has wrought. Above all, NFP boards are under pressure to navigate their organisations financially through this time of economic uncertainty. Boards will need to anticipate the financial impact on their organizations, locate government and civil society resources, and strategize their fundraising activities. Advisors can play a crucial role in assisting and advising NFP boards through this process.  We can assist with approaching governments for financial support while at the same time helping NFP boards to review their operational framework to keep their operations cost-effective. 

Clear communication

NFPs, like other organisations and individuals, are facing an uncertain future. Since experts can’t predict the pandemic’s depth or duration, it’s impossible to estimate its economic impact. NFPs need to remain transparent about the challenges they face during this financial turbulence. Transparency builds trust with donors, grantors, staff, and the general public. A project-oriented communication approach that showcases the organisation’s purpose, activities, and goals will keep the board, staff, and funding sources aligned. Financially, NFPs will need to monitor expenses carefully while pursuing all financial relief possibilities, including government and private sector sources. 

The final word

NFP boards have a weighty responsibility during these uncertain times. Most organisations will need to change their usual fundraising practices to take advantage of the government and private resources available. Volunteers and staff need to be protected while serving new needs among their populations, and boards may need to consider changes in operations and programs. NFP boards should be working with their trusted advisors proactively to anticipate changes and create plans to sustain their organisations.

With a new US president-elect making it quite clear that negotiating a UK/US trade deal is far from the top of his list of priorities – and a non-starter if it would threaten the Good Friday Agreement – there appears to be fresh impetus in talks with the European Union (EU).

As things currently stand, Michel Barnier and team are back in London attempting to find a way through the remaining hurdles to doing a deal: state subsidies, and to a lesser extent, fisheries.

But whatever happens, the food supply chain in the UK, and also in Europe, faces upheaval.  Even if the UK government’s preferred ‘Canada’ solution is somehow secured at the last minute, trade in food will be far from the frictionless, pre-Brexit status quo. Such a deal would still involve tariffs on certain produce, customs checks at the border, and considerable regulatory controls. Frictionless trade stops on 1 January, deal or no deal.

Let’s not forget, too, that the UK will have to replace all of those third-country trade deals which it currently enjoys via EU membership. That’s not impossible, but it will take time, and certainly won’t be complete by the end of the transition period.

It is clear that the implications of the negotiations are swiftly moving from conceptual to real, and nowhere more so than in the food and farming sector.

More than half of the UK’s food is imported, and much of it comes from the EU (85 per cent of our vegetable imports, for example). The huge lorry parks being built in Kent demonstrate how the UK government believes that international traffic is going to be affected from 1 January, and this is sure to have an impact on food supply.

Even in the best case scenario, with a comprehensive free trade deal, there will be added costs, time-consuming extra logistics hurdles, and tariffs on some foodstuffs.  If we are not prepared to adopt EU food standards, then we will face extra barriers to exporting (it’s inconceivable that Europe will accept British-made foodstuffs which include ingredients imported from outside the trading bloc, for example).

Added to all this, the end of freedom of movement threatens to remove a considerable proportion of the UK’s food and farming workforce, which, in the short-term at least, will add costs, and could well reduce capacity drastically.

Farming itself is a traditionally resilient industry, but too often some within it resort to a ‘head in the sand’ approach.  But with a combination of potential threats, simply battening down the hatches is unlikely to work this time.

The farming sector can’t face this on its own; shoring up the supply chain is something which needs a more collaborative approach. The need to replace overseas suppliers with UK alternatives (where possible) to ensure continuity of supply and avoid costly bureaucracy and delays will mean the whole food production industry will have to work together, blurring the lines between primary production, food processing and manufacturing, distribution and retail.  No one part of the sector can find a solution on its own.

The UK Government says that its agriculture and food policies are designed to drive improvements in productivity which should mitigate the inevitable cost increases inherent in uncoupling from frictionless trade with the EU.  However, even if these are successful, it won’t happen overnight.

The food sector will need to work together to create a more robust supply chain, but this will take time; in the meantime all of our shopping baskets will potentially be less varied and more expensive from January.

If there are to be any winners of the COVID-19 pandemic, then e-commerce is undoubtedly one. Turnover in the industry continues to grow and the recent (partial) lockdown in large parts of Europe further supports this growing trend. At the same time, online retailers are promising ever shorter delivery times for delivering goods to customers.

As a result, the delivery of online goods poses ever greater challenges for the logistics industry. Primarily, the timely and punctual delivery to customers, the so-called “last mile”. Increasingly, logistics service providers are working together with the real estate industry to develop new solutions for last mile logistics. It is expected that in the future, logistics properties will no longer be built on greenfield sites outside cities, but increasingly in cities themselves. In other words, inner-city distribution centres are needed for online retailers to guarantee their delivery times of one to two hours.

Inner-city logistics properties will need to allow for storage and packaging on site due to their building structure. In addition, the location of the property will need good transport connections, so that deliveries can be handled without issues.

It is questionable whether existing financially distressed retail properties can be converted into inner-city logistics centres or distribution centres. This is certainly conceivable in the case of closed department shops with correspondingly large areas and good transport connections. However, many retail outlets are unlikely to meet the requirements of a modern logistics property even after conversion. In those instances, it should be considered whether demolition of the property combined with a new building is the better alternative.

In order for such inner-city distribution centres to exist, a rethink needs to takes place. Currently there are hardly any logistics properties in central inner-city locations. Such locations are currently reserved for office and residential development. It is questionable whether the policy is already in place to rededicate inner-city plots of land for the development of logistics properties.

The discussion about inner-city logistics has only just begun. It remains to be seen which developments and solution concepts will emerge and to what extent inner-city logistics properties will be required in the future.

By Oliver Middendorf, HLB Germany