The impact of Brexit on the Charities Sector

Published: 24 June 2016

Today we have witnessed a monumental  decision about Britain’s future; the overall economic, political and social implications of this are unknown however what is clear is this could be devastating for the charities sector. Sector leaders have been speaking out, publically seeking reassurance from the government and warning of the financial and social impact this is likely to have on the sector and those it serves.

In 2014 UK charities received over £200m from EU funding. Earlier this week Rob Wilson, the Minister for Civil Society, said that that leaving the EU would exclude UK charities from access to a funding pot worth £13bn between 2014 and 2020.  The Charities Aid Foundation has urged the UK Government to meet any shortfall in funding to charities that comes about as a result of missing out on EU funding, and to ensure that London’s status as a “global hub of philanthropy” is maintained. Their Chief Executive, Jon Low has said “In the short-term, the cloud of uncertainty hovering over the nation’s finances will have an impact on charities and their ability to help some of society’s most vulnerable people. It will be vital for the millions who benefit from the support of charities that government addresses this quickly. A strong and stable economy is a crucial factor in people and businesses feeling able to donate to good causes.”

Paul Palmer, professor of voluntary sector management and Associate Dean for Ethics, Sustainability and Engagement at Cass Business School, suggested  “It is possible the sector will experience a ‘double whammy’ of financial losses particularly if government funding has to be further reduced, donations from the public fall as donors feel less wealthy and, if house prices fall this is likely to have an impact on legacies.” The economic impact could see increased unemployment and more reliance on the charitable sector for services and support. In addition, many charities are heavily reliant on workers from outside of the UK; EU migrants make up an estimated six per cent of jobs in the social care sector in England, equating to 80,000 people. In a sector where staffing pressures are already immense, the implications could be devastating and this needs to be addressed.

From a political perspective, the Government will be focussed on how to extricate the UK from the European Union and distracted from the social impact that the division of opinion has created. The ‘Leave’ campaign has incited further racial tensions which will impact on communities; through their work with local communities and individuals, charities have an integral role in addressing social divide. In addition, David Cameron’s resignation today could have a huge impact on the sector. Sir Stephen Bubb, director of the Charity Futures Programme cited that any replacement leader of the Conservative party was likely to be less sympathetic to charities; “David Cameron believes in an inclusive society. I’m not sure there is any replacement to lead the party who has any sort of feeling for the charity sector.”

In his message to the sector earlier today, Sir Stuart Etherington Chief Executive of NCVO said “We can only hope for skilled and thoughtful leadership in the coming weeks and months in order to avoid the worst of the financial predictions. The sector’s voice will be essential in speaking up and shaping the future. We are entering rough waters – the consolation is that we in the voluntary sector are masters of navigating such seas.” We are clearly entering unknown territory and the overall implications of the referendum will not be apparent for some time, however the sector must show solidarity, working with one voice to influence the future.

Anna Jay is a lead Consultant in the Not for Profit Practice, she works specifically with charities providing social care and welfare, children’s, education, and homelessness services

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