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What does Brexit mean for charities?

24 March 2017

 Article 50 has been triggered, so what do charities need to know about Brexit?

The shock waves from Britain’s vote to leave the EU continue to reverberate, and will for years to come. Much ink has already been spilled on Brexit, but what does it mean for charities, and their role in society, as Britain started the process of leaving on the 29th March?

 

Funding

Brexit’s impact on EU funding streams accessed by UK charities has been a main focus of debate thus far. Some EU programmes which charities have access to are directly managed by the European Commission, some are indirectly managed by other agencies, and the largest portion goes via ‘shared management’, where allocating and administering EU funds is the responsibility of national governments. Under shared management, EU funding is often matched with funding from national governments into one programme.

 

Interestingly, determining the share of directly managed funds going to UK charities is the most clear-cut, because the Commission’s data is more transparent. DSC research has found that of €6.3bn directly managed funds awarded to UK bodies by the Commission in 2015, at least €271.2m went to 295 UK charities. Determining what the EU provides to UK charities in total is much harder, partly because of the blending of EU and domestic funds under shared managed schemes. EU funding may not be recognised consistently or at all in available data that can be matched to charity income. It has been estimated that as many as 3000 charities could receive some kind of EU funding, primarily larger organisations above £10m income.[i]

 

Although €271.2m is a significant chunk of cash (which significantly underestimates the total received by UK charities), EU funds are thought to represent less than 1% of the charity sector’s overall income. As Brexit progresses, funding programme cuts, revisions or wind-downs will significantly affect certain sectors and organisations (for example employment and skills), but the overall effect on the sector as a whole may not be dramatic.

 

At his last Autumn Statement, Chancellor Philip Hammond gave assurances that subject to being value for money and in-line with government priorities, existing funding agreements would be honoured and that current programmes would continue through the Brexit period. There are well-organised lobbies for agriculture, fishing and other industries that may fight hard to retain big chunks of shared management funding, for example the European Agricultural Fund for Rural Development and the European Regional Development Fund.

 

From a charity perspective therefore, one risk post-Brexit may be that these interests take priority over things like the European Social Fund, a shared management programme administered by DWP, which supports employment, skills and social inclusion. Charities and social enterprises are more likely to receive funds from the ESF, which has a planned spend of £6.1bn during 2014-2020 in the UK, with £3.2bn of this to be contributed by the EU[ii].

 

Policy shifts

Even during normal times charity policy is not a high priority for government. Now, Brexit seems to eclipse all else and charities will have to fight even harder to be heard. Brexit will eventually bring a plethora of legislative and policy changes, but its final nature remains unclear. Charities are only just getting to grips and trying to organise, and there is still no coherent, nationally coordinated response.

 

Certain subsectors which are likely to be highly affected, like environmental causes, are already mobilising. For example, the Greener UK coalition[iii] is a group of leading environmental organisations uniting to advocate for environmental interests during Brexit. Other subsectors working with refugees and asylum seekers, or human rights may not be far behind. Mobilisation should accelerate as the Article 50 process moves forward. More work needs to be done to discover and raise the profile of these emerging networks, and connect them for common purposes.

 

There are also important questions for charitable foundations to consider here. Traditionally they are generally reluctant to fund policy or advocacy work. But who else will fund the advocacy the sector needs to compete if they don’t? Could crowdfunded advocacy campaigns be part of the answer? What about individual philanthropists? Without greater investment of resources in policy, advocacy and campaigning, Brexit will happen to charities and their beneficiaries, in many cases negatively, rather than in a way which secures their best interests.

 

Social, economic and geographical inequalities

Finally, and perhaps least clearly, Brexit raises some big questions about charities’ role in society. Data shows that charity density corresponds more closely with affluent rather than deprived areas – it is, like other social capital, unevenly and unequally distributed.

 

Brexit was pushed over the line by working class voters in post-industrial areas that for decades have felt abandoned by everybody – ironically, except perhaps by the EU. The fact that, for example, many ex-mining communities in South Wales voted leave, when that area receives billions in EU development money, is counter-intuitive but cannot be ignored.

 

What role should charity and social enterprise play in addressing the underlying issues behind the vote in these communities? There are no easy answers, but we probably need to be asking the questions.

 

 

 

[i] NCVO Blog: What do we know about charities and the European Union? http://blogs.ncvo.org.uk/2016/12/16/what-do-we-know-about-charities-and-the-european-union/

 

[ii] DWP, European Social Fund Operational Programme 2014-2020 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/461596/ESF_Operational_Programme_2014_-_2020_V.01.pdf

 

[iii] Greener UK http://greeneruk.org/pledge.php

 

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Jay Kennedy

Policy officer for the Directory of Social Change

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