Brexit and Charities – what next?

For those working in the third sector, and for us all, the Brexit outcome creates some profound uncertainties, and tells us some difficult truths. There are also immediate practical implications.

Leadership

Many of you will rightly be concerned about the impact on your communities and those you work with, and dealing with the degree of fracture and alienation in our national life. As Stuart Etherington said on Friday 24th June, “the voluntary sector is needed now more than ever” (found here).

We are already seeing some worrying changes of mood in our own cities and neighbourhoods, with disturbing attacks on community centres used by EU nationals, for example. We all need to focus on maintaining and growing relationships of trust wherever we are, and our third-sector and faith-based clients will be central to this process in their communities.

Devaluations

The devaluation of currency and other assets is already being faced by overseas development charities and other organisations with substantial overseas activities. It will also impact on organisations involved in building schemes, particularly community-led housing. There may also be indirect impact if, for example, there is an increase in borrowing for the public sector from the Public Works Loan Board (PWLB) – we have a number of clients from the community sector developing schemes, working with their local authority, which are part funded by the PWLB. Costs of these schemes may increase to the point where they are no longer viable. Finally, charities with legacy defined benefit pension schemes may face increasingly problematic deficits as markets fall and investment income reduces.

Change of sentiment

There may well be an impact on funding. Many charities are funded directly or indirectly from European sources, and a number of programmes or projects starting now will have funding terms that go beyond the likely date of the Brexit. Just for example, the Building Better Opportunities Fund – a European Social Fund backed programme run by the Big Lottery Fund, is timetabled to run until 2020. Whether it will or not is another matter entirely.

Government policy change

If there is indeed a shift in policy, it is likely to be a shift to a more right-wing agenda, given the position of much of the “leave” camp. We have already seen the indirect impacts of public sector reforms on charities supporting the poorest in our society. Currently the policy position is very unclear, and we will all need to watch carefully as events unfold.

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