The current situation:
It is estimated that the charities sector could lose £200 million European funding per year following Brexit, a figure drawn from research which found 249 charities received £217 million in 2014. Separately, the minister for Civil Society, Rob Wilson, has estimated that coming out of the EU could deprive UK charities of the opportunity to bid for assistance from an EU funding pot totalling upwards of £13 billion in the period to 2020. These figures do not take into account the billions of pounds from the EU which support economic development for poorer areas in the UK.
What might change?
Leaving the EU will impact on rules and regulations deriving from EU directives, in particular those relating to working conditions, health and safety and fundraising. On a positive note, leaving the EU could reduce red tape, alleviating the sector’s regulatory burden. Brexit may also give the Government greater control over the UK’s VAT regime, potentially allowing for a reduction in VAT liability for charities.
What impact could this have on UK charities?
The economic uncertainty will undoubtedly impact the sector – “A strong and stable economy is crucial for people and businesses to feel able to donate to good causes” (John Lowe, CEO of the Charities Aid Foundation). Donations from corporations and individuals may reduce and social investment could fall. In the event of an economic downturn, the return on charities’ own investments could be affected and demands on the sector, which supports the most vulnerable sections of society already hurt by the recent recession and subsequent austerity measures, would also be likely to increase.
Brexit could have a bearing on partnerships and the sharing of knowledge and expertise with EU organisations. The health and social care sectors have also expressed concern that it could affect their ability to fill vacancies.
What you need to be thinking about now:
It is important that charity trustees act quickly to carry out a risk assessment and to review their fundraising and investment strategies where appropriate. Charities need to consider how they might be affected in order to identify the steps they can take to protect themselves and their ability to provide for their beneficiaries.
Sources of funding should be analysed and alternative funding options considered. This is particularly vital for those charities considering, or in the process of, obtaining EU funding. Capital programmes take years to negotiate and deliver, and while specific European funds may be wound down over a number of years, or commitments honoured by the UK Government, it seems unlikely new commitments will not be entered into.
Sir Stuart Etherington, CEO of NCVO, has called on charities to help heal divides and rebuild trust in society following Brexit. Charities must also be alert to the potential impact of leaving the EU and be ready to speak out to ensure key sector issues are not ignored in the de-coupling from the EU.