Financial Tips for Gurdwaras to overcome COVID19 challenges

In these testing times, Gurdwaras should all pursue opportunities to raise and save as much cash as possible, to ensure they can adequately function until there is some return to normality.

A swift return to normality once the lockdown ends is unlikely, the consequences for Gurdwara finances could be severe. Expect donations to be significantly lower and plan accordingly.

The key to survival and sustainability is to ensure you have enough cash to operate over prolonged period of reduced donations/income.

We are sharing our first-hand experience from running one of the largest Gurdwaras in the United Kingdom.

The following measures have successfully been used by our Gurdwara to improve our cashflows and can be applied to most Gurdwaras and Sikh charities:

Banks are being very accommodating to requests to defer loan (capital) repayments. Getting payments suspended between 6-12 months is typical and achievable. The deferred repayments will extend the term of the loan. Speak to your relationship manager.
Energy suppliers and HMRC (PAYE) are all allowing for payment plans. Speak to your utility companies and HMRC (Time to Pay) and agree on a payment plan of up to 12 months.
If you have any hire purchases or leases (for equipment/vehicles), seek payment deferrals. Finance companies are providing payment deferrals of over three months.
Notify utility companies if buildings are closed (particularly non-metered so they can reduce bills). Renegotiate electric, gas, water contracts- use a broker and ensure their commission rates are minimal. Check your energy bills to ensure that as a charity you are only paying 5% VAT. Charities are also exempt from the climate change levy (CCL).
CBILS: The Government has changed its guidance so that Charities now qualify for the scheme. Previously Charities needed to have 50% of their income coming from trading activities. Under the scheme, Charities can borrow up to £5m over six years. Realistically, only larger Gurdwaras will be able to utilise this scheme.
Bounce Back Loan: In response to the difficulties faced under the CBILS program, the bounce bank loan provides a 6-year loan of up to £50k with interest capped at 2.5%. The application is straight forward and based on a self-certification. We are finding that funds are typically released within 48 hours of an application. You will not need to make any payments for the first 12 months; however, you can repay the loan at any time. A £50k loan would result in monthly payments of £939 starting after the first year.
Gift Aid– If your Gurdwara is not already claiming, start now. Qualifying donations will earn charities an extra 25%. The process is straight forward. At present Golak donations will not qualify for gift aid as declarations are not typically completed. There is a solution for this, see below.
Gift Aid small donations scheme (GASDS)- This scheme lets Gurdwaras claim gift aid on Golak donations. Nearly all Gurdwara will be able to claim gift aid on contributions of up to £8k per tax year without the need for declarations. If a Gurdwara has more than one building in the same local authority, you can claim gift aid on donations of up to £8k per building. Gurdwaras can claim for the previous two tax years.
Coronavirus Job Retention Scheme (CJRS- Furlough scheme). The Government will provide a grant of up to £2,500 per employee who have been furloughed as a result of COVID19. The cash grant is to cover the costs of paying employees from March to June 2020. The scheme is expected to continue in some form after June. The grant can be used to cover the costs of employees (Granthis, Langaris, admin and security staff). With Gurdwaras being closed, it is unlikely that there is enough work for all staff, this scheme will provide a cash grant to continue paying employees.
If necessary, review staff hours and reduce. Ensure you follow HR best practice when changing employee terms and conditions.
Grants: On 8 April the Government announced a £750 million package of funding to support the work of charities during the coronavirus outbreak. £370 million for small and medium-sized charities, including through a grant to the National Lottery Community Fund for those in England, will support local organisations including those delivering food, essential medicines and providing financial advice. There is scope for Gurdwaras who are providing langar to qualify. Some local authorities are also providing funding. A comprehensive list of grants is available on this link
Online donations: Gurdwaras should encourage Sangat to set up standing orders and direct debits. Providers such as Gocardless make it simple for charities to set up and manage. Facebook and Instagram also allow for online donations to be made. Text to donate is available from DONR.
Once Gurdwaras do reopen, there will be less Sangat visiting. Changes in behaviour will also mean Sangat donate less cash, with people being concerned about cash and coins harbouring the virus. Gurdwaras should look to install contactless Golaks and donation boxes.
Some Gurdwaras own commercial and residential property. Although the retail market landscape remains challenging, Gurdwaras should consider letting out surplus assets to generate extra income.
Review all expenditure and renegotiate pricing with suppliers. Review supplier statements and recover any amounts owed/overpayments.

Financial wellbeing depends on effective cash management. It is critical that Trustees of all Gurdwaras proactively implement steps to ensure they have adequate cash flow for the next 12 months. The future is uncertain, and it is likely an economic recession will place extra demands on Gurdwara services (such as langar), acting prudently now will ensure our Gurdwaras can successfully continue to serve the Sangat.