Chexit – how would UK charities be affected if we leave the EU?

The charity sector contributes around ￡12bn to the UK economy, employs around 750,000 people. Volunteers contribute around ￡23bn of their time. So it seems timely to think about the impact of leaving the EU on this substantial sector of our economy.

In a nutshell, the charity sector will be worse off, if Britain leaves Europe. At least, that’s the prevailing view of a group of Charity CEOs we questioned on the topic recently. 50% felt the overall impact of Brexit on their organisation would be negative, another 47.5% thought it would be neutral and 2.5% felt it would be positive.

One of the most common arguments for both sides of the Brexit debate  is around funding/finance in relation to charities. On the one hand it’s regularly argued that the loss of EU funding, some ￡210m+ to charities in 2014, would be too great to lose. On the other it is said that accessing EU funding is increasingly difficult (not unlike in the UK) and that the ￡5bn net contribution to the EU would be redistributed with some heading into the laps of charities.

For the “Remain” camp the funding argument is certainly a strong one. Of the aforementioned ￡210m+ Oxfam for example received around ￡39m. Inevitably  any cessation in funding, even if replaced in due course by our own government increasing it’s spend on the sector, will cause uncertainty in the meantime. As one of our respondents points out, “there is no guarantee at all that if we left EU the government would replace EU funds - or continue to target the most disadvantaged members of society.”

Contra to this, among the responses of the 2.5% of Brexit supporters it was asserted that EU funding has now become virtually impossible to access (some had secured some in the past).  Respondents cited the “complexity of EU funding streams, the resources required to bid for them and the risks associated with EU funding (paperwork, clawback etc.)” as part of the issues making it an unsatisfactory source of funding for charities.

It certainly should be noted that as the EU expands with countries joining with economies weaker than the current litmus test stipulates, there will undoubtedly be more competition for the pot of cash available to charities, making the process potentially even more difficult.

However in practice, the real impact of Brexit would be more nuanced than simply how the cash is spread around. When it comes to recruiting staff, the removal of the right to work anywhere in Europe could affect existing charity staff as well as the ability to recruit key skills.

One CEO commented: “We do have a regular number and flow of highly qualified interns coming to work with us doing spells for up to 6 months at a time who come from countries in Europe…whilst making a social contribution. They provide help in our finance team, our digital and communications teams in particular. We have not had an equal demand for these roles from UK based people.”

A charity working largely with young people said that, though their core work is not funded by the EU “our young members sometimes participate in exchanges, training and work placements funded by the EU's Youth In Action stream [and] it would be harder to arrange these cultural exchanges.” They also commented that recent changes to visa rules with non-EU countries has ended decades long partnerships with youth organisations in other countries.

In support of this argument another said, “our beneficiaries are young people and youth organisations. Young people need to be able to work in a global market so opportunities such as those funded through Erasmus Plus would be missed.”

A CEO of a medical research charity raised concerns over the sharing of knowledge and expertise, “medical research, and expertise in managing [medical] impacts after the event are based on knowledge sets that are not specific to one country, but different countries have different strengths with regard to the expertise areas and approaches. We have found the impact of belonging to a Europe where some funding and easy pathways to collaboration are provided incredibly beneficial.”

While the survey showed little concern among CEOs of the ability of the Government to produce a detailed plan to ensure direct funding replaced EU led funding, some concerns were raised about a potential drop in the value of sterling post-Brexit and the impact on funds provided in other denominations.

So it seems the main points of contention are around; the movement of people –in terms of hiring staff, finding skilled volunteers but particularly in ensuring opportunities to exchange ideas and experiences with other European organisations and individuals. Also the ability to learn from our European neighbours, influence them and work together to tackle large scale social issues – these are the some of the concerns the charity sector needs to be alive to, when thinking about a post Brexit world. Inevitably charities work as part of a larger group of civil society organisations on issues that aren’t contained by national borders. By restricting the sector’s ability to recruit, partner and fund EU people and projects we run the risk of weakening the impact of this thriving sector.  

David Lale

Charity People

April 2016

(To protect respondents in light of Charity Commission comment regarding charities and the referendum, all direct quotes are anonymised)