What Could Brexit Mean for the Charity Sector?
Brexit will undoubtedly have some impact on all sectors in the UK. The questions is whether it will be negative or positive? The charity sector is never immune to the fluctuations of the economy. After all, donations ultimately come from profit of some kind. Recent official forecasts from Whitehall suggest significant slowdowns in growth, though these reports have been disputed by ministers as a revolt by civil servants, with arch-brexiteer Jacob Reese Mog claiming they are “always wrong.” Whether such a downturn occurs, the charity sector is likely to face some changes, but just what will they be?
Research toward the end of last year by the Directory of Social Change suggested a possible 250 million pounds worth of funding could potentially be lost. No minor figure: by the way, if you want to make your own mind up, you can download their report. In summary, they claim:
“We estimate that the total funding from which UK charities benefitted in 2015 to be at least £258.4 million…
- In 2015 about 295 UK charities were awarded a sum total of £210.9 million under direct management.
- In the same year around 113 UK charities also received around £47.5 million from three main European Structural and Investment Funds under shared management.” -Directory of social change.
These estimations are based on the actual funding charities have received from the EU and the structural investment fund, so it’s hard to say what this money will be replaced with. (Maybe the legendary 350 Million).
Increased tax and legislative freedoms
Still, it may not all be negative; an efficient and well managed Brexit could result in more favourable tax rates. Research by The Charity Finance group suggests that increased freedoms for the UK Government when setting tax rates and procuring state aid may prove beneficial to charities.
“Remaining in the Single Market and customs union, at the extreme end, creates the risk that the UK charity sector could be left in the worst of both worlds where the UK has to harmonise tax policy, State Aid and procurement policy with the EU but is not able to change it. This is a situation that the UK government should avoid, either through the structure of the deal or through negotiations.” -Charity Finance Group
This may not seem significant, yet charities contribute £1.5 billion in tax each year, (some of) this money has the potential to find its way back into the charities’ coffers. Though, the CFG also note that Brexit is crafted in the interests of big business. Associated benefits may emerge such as the reduction of public procurement rules and the potential for more funding for UK-based charities.
The impact of Brexit on charities will be more than financial. Other, harder to resolve consequences may occur. The VODG group have produced a report estimating the result of Brexit on the charity sector. The social care sector alone is dependent on around 90,000 EU workers and the NCVO reports that 4.5% of the charity sector workforce are EU nationals. As we have already started to see in the NHS, financial sector and others, skilled workers from EU nations are beginning to seek opportunities elsewhere. A possible recruitment shortfall for both volunteers and paid staff is possible. Still, it’s worth remembering that the third sector is staffed in majority by British Citizens.
Further concerns emerge around legal implications. Talk of a so-called “British Bill of Rights” and a possible move away from the European Court of Human right could have far-reaching legal consequences. The human rights sector and other impacted areas like international development and social care account for a large proportion of the charity sector. VODG point to a harsher climate for the disabled, unemployed and a rise in hate crime against some vulnerable groups who are currently subject to protection form European courts. The Equality and human right commission highlight two critical legal outcomes:
- the loss of the Charter of Fundamental Rights which includes some rights which are not in the Human Rights Act, for example on the rights of the child and a general right to non-discrimination. The Charter also provides a stronger way of enforcing human rights, in some cases, than the Human Rights Act.
- the loss of the guarantee for equality rights provided by EU law. As a result of Brexit a future government could seek to pass laws which repeal or weaken our current rights below the standard of EU law rights -The Equality and human right commission.
Such implications could impact both the charity sector and public service such as social care.
But what about donations? The big question on a lot of charities’ lips will be “will our income drop?” Well, the answer seems to be much the opposite. CAF’s annual giving report shows a 10% increase in charitable giving, where 41% of the population have donated. Research suggests the opposite of a doom and gloom post-brexit sector, with people becoming more charitable and pulling together.
“Our research shows that there has been no ‘Brexit-effect on charitable donations so far, but there has been a noticeable increase in people engaging in social and political issues.” -Charities Aid Foundation.
Brexit is a significant political turning point for the entire nation. Ultimately the impact on the charity sector at this stage is mostly speculation. The best advice at the moment is to prepare and collaborate, by working together, the charity sector can mitigate any negatives and seize upon any positives. What do you think? if you’ve got anything to say, let us know in the comments, or connect with us on social media. You can find us on Facebook, Twitter or LinkedIn.