Brexit: impacting on charities

Recently, a survey highlighted that 85% of charity staff believed Brexit would have a negative impact on their organisation, and that 90% of charity staff voted ‘Remain’ in the referendum. Considering the issue split the country, this is an overwhelming majority.

Hard hitting
Funding is of course key to any charitable organisation, and many charities are heavily dependent on government subsidies. It is thought that UK charities receive in the region of £200 million of EU funding each year, and understandably, not all of that is going to survive the fall-out from Brexit.

Is the UK Government going to make up the entire shortfall? Not if the widely-held view that purse-strings will be tightened in the post-Brexit rush plays out. It is also thought that the science, technology, medical and research sectors that lose out on EU funding will be higher up the queue when it comes to receiving public money from the UK Government. And there’s probably some element of truth behind that – there is, after all, a finite amount of money to go around.

Bigger picture

But it’s not just the money – some charities have expressed concern that they may lose European workers if the UK decides not to support freedom of movement of workers. Others have expressed a concern that human rights, workers’ rights, women’s rights and minority rights will be eroded by the UK Government once the oversight of the EU is directed elsewhere. But do we really trust our politicians that little? Is it right to believe that the UK Government will send the country back to the virtual Dark Ages by repealing laws that, in some cases, took centuries to put in place?

Any changes to VAT rules, employment law, fundraising, data protection and a raft of other areas of the law, will affect charities as much as anyone, and as The Charity Commission’s consultation period on the new Charities (Protection and Social Investment) Act has just come to an end, there will undoubtedly be changes afoot. Charities will shortly be invited to register with the Fundraising Regulator, which is likely to increase compliance costs. How much more regulatory cost can the sector absorb? The truth is, that we just don’t know what will happen in terms of regulation.

Not yet, at least.

Any charities that concentrate on alleviating poverty or that work with refugees, migrants and asylum seekers are expecting to be busier than ever, while receiving less funding than currently, inevitably placing an even greater strain when help is most needed.

Silver lining

But should Brexit be seen as an entirely negative outcome for the third sector? Free from the somewhat perceived suffocating bureaucracy of European red-tape, the time for charities to join together and seek to make the most of the brave, new world could be upon us. ‘Big business’ will undoubtedly look to capitalise on Brexit wherever they can, why should charities not look to secure the regulation, tax benefits and other security that they want and need as well? Just as registering with the Fundraising Regulator could be turned into a positive, why not say the same for Brexit?

The charitable sector needs to do what every business sector should and look beyond the scaremongering. Before the referendum, Project Fear was pitched against Project Hate but in reality, we aren’t facing World War III, and (so far) haven’t been invaded by zombies (or whatever post-Apocalyptic-nightmare was being forecast). We haven’t seen the catastrophic economic downturn that was predicted, and the UK isn’t in recession. Indeed, unemployment figures fell to a new low in September, so perhaps the economic outcome won’t be as dire as some feared.

And that is key because recession typically means that people find more critical things to spend their money on than charitable donations.

True, it is a difficult time for the charitable sector; any period of political and economic uncertainty always is, the same as for any business. And yes, central funding may be harder to come by in the future but, after surviving the last recession, many charities have come out leaner and more efficient than they’ve ever been. Many are more geared up to making the most of opportunities and while there will doubtless be the truly tragic story of the genuinely worthwhile charity that has had no choice but to shut its doors, and whilst a ‘Remain’ vote may have seemed the best result for the sector, there are still opportunities for charities to get their message across. That message, surely, has to be to focus not on what could have been, but on making the most of the world that the UK will, eventually, become without the EU member states stood behind it.

Preparation and patience

There are many resources out there offering Brexit-related advice to charities but they all have one thing in common: put simply, it’s too soon to know what’s going to happen in the medium-to-long term.

Perhaps rather tongue-in-cheek, the Directory of Social Change suggests that charities “keep calm, carry on helping people”. And it’s hard to argue against that. Charities did good work before the UK joined the EU, and they will continue to do so once we leave. Being the resilient sector that it is, the charitable world will adapt and maximise the benefits and opportunities that will inevitably arise.

Being members of the Charity Law Association and the International Division of the Law Society, BPE’s charity team is well-placed to advise organisations on the risks of Brexit. But that advice will only become clearer over the course of the next two-to-three years as ‘EU independence day’ gets closer.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.