On 7 July, we held an online event about the potential implications of a Brexit for the voluntary sector. The webcast was hosted by Karl Wilding, director of public policy and volunteering at NCVO, with Chris Walker, who leads on NCVO’s parliamentary work, Elizabeth Chamberlain, who leads NCVO’s policy work on charity law, governance and fundraising, and Philip Kirkpatrick, charity law specialist at Bates Wells Braithwaite.
I highlighted their main messages in a previous blog post. Here we’ve wrapped up the responses to some of the questions attendees asked the panel.
What should trustees be thinking about right now?
If you are a trustee, your board might want to consider if and how the referendum result will impact your organisation and what that means for your strategy going forward.
The Charity Commission’s guidance ‘charity governance, finance and resilience: 15 questions trustees should ask’ could get you started. It includes advice around assessing the adequacy of your reserves and building financial resilience.
If you’ve received EU funding in the past, you’ll need to look at alternative sources of funding and draw lessons from the last recession to balance out risks. Philip Kirkpatrick suggested that overseas aid charities might want to think about setting up an entity in another EU member state to ensure they can continue to make use of EU development funding in their work.
Another useful document is NCVO’s discussion paper aimed at trustee boards published before the referendum. It gives an idea of some of the risks that your organisation could face in the future.
Lastly, Elizabeth Chamberlain suggested that charities ask what they can do for the sector and how you might be able to help accomplish the broader goals of equality, diversity, and inclusion in the wake of a divisive referendum campaign. Read what Stuart Etherington said about the need for charities to heal wounds following the divisive campaign.
A positive outlook: Opportunities for organisations
Asked to name some of the opportunities a Brexit could hold for charities, Chris Walker suggested the referendum result may have been a wake-up call for many politicians, who may look to address emerging concerns around social cohesion.
This could work in favour of voluntary sector organisations trying to ensure that the voices of disadvantaged communities – especially in the periphery – are heard. This is also an opportunity for our sector to improve social cohesion and address tensions, for example by organising ‘random acts of kindness’.
Philip Kirkpatrick explained that changes to value added tax could provide a financial boost to some charities. Many charities end up with large VAT bills that they can’t pass on as businesses tend to, because the things they sell are often exempt from VAT.
While this makes their goods and services cheaper, charities lose out through higher tax bills. The Charity Finance Group estimates that each year charities lose up to £1bn in this way. As some VAT rules are set by the EU, Brexit would allow the UK government to change VAT rates and classify more goods and services made by charities as zero-rated rather than exempt. This may allow charities to reclaim VAT on purchases associated with these goods and services. However, even if it happened, this likely wouldn’t be for years.
The webcast showed that many issues are still largely up in the air. This includes questions about:
- future regional assistance programmes to replace the European Structural and Investment Funds (since the referendum, there have been no guarantees by the Treasury that such programmes will be created)
- the future status of EU nationals in the UK (as of yet, their status has not changed, but future developments are unclear)
- whether fundraising data will continue to be affected by the General Data Protection Regulation post-Brexit (since the UK will want to continue to trade with EU countries, similar data protection standards will likely be set).
Thinking long term
Karl Wilding suggested that the short-term effects of the referendum may have been overestimated, whereas the long-term consequences are the ones that require the most attention. Therefore, voluntary organisations may want to devise or revise their long-term (financial) strategy.
Explaining your value in the new political climate
One way of maintaining the level of charitable giving to your organisation, Karl said, could be to clearly explain the difference you make in your community. The dichotomy of ‘metropolis’ versus ‘periphery’ which characterised the referendum campaign suggests a new emphasis on ‘the local’ and voluntary organisations might do well to adjust their messaging to this.
Politics and regulation
Chris Walker said that in order to have your say in the upcoming withdrawal negotiations, you may want to determine which pieces of legislation are crucial to your sub-sector or the sector as a whole, then make sure decision-makers in the newly-created Brexit unit in the Cabinet Office are aware of their importance.
This might also be a good time to lobby backbench MPs who will not be centrally involved in the highly technical withdrawal negotiations. To bring yourself up to date with the latest political developments, take a look at our new Inside Track.
Keep in mind that the process of determining which laws and regulations to retain will require persistent lobbying over an extended period of time to ensure that key issues are shown due regard.
Keep in touch
Do keep in touch with NCVO to inform our talks with the new Brexit department, and help us build an evidence base and ask the right questions around Brexit implications. If you would like to contact us, tweet us using the hashtag #ncvoBrexit or email email@example.com,uk. Also keep an eye on the NCVO Europe page for more information and future events.