UK charities face Brexit funding cliff edge of more than £250m

Fresh research published by the Directory of Social Change (DSC) reveals that UK charities risk losing at least £258.4m in EU funds because of Brexit. The full amount is likely to be far higher due to the way many funds are distributed by intermediary agencies in the UK, making comprehensive data difficult to obtain and analyse.

Much is at stake for the sector

With Article 50 triggered and Brexit negotiations sluggishly underway, it is less than two years before the UK will leave the EU and its institutional funding streams – mainly the European Structural and Investment Funds.

Charities in the UK today receive a significant amount of EU funding. We estimate this funding was at least £258.4m in 2015. Charities will feel the pinch of a potential non-replacement of this money. A ‘no deal’ Brexit could lead to an even sharper shock to the system, if currently awarded funds are suddenly cut off overnight.

A large amount of EU funding is at stake, which is vital to the charity sector. The beneficiaries of hundreds of charities working in particular sub-sectors like overseas aid, research and conservation will likely be hardest hit, unless the UK government acts swiftly to replace these funds. Strong disparities in the distribution of funds across the UK home nations means that the impact will also vary significantly across regions.

Charites about to lose funding are left in limbo

It’s nearly 2018 – but the future of EU funding after Brexit remains extremely murky. Despite these clear risks, charities are not even among the 58 sectors that are supposed to be consulted on the potential impact of Brexit.

Government needs to clarify the situation urgently, because uncertainty is already affecting budgetary outlooks for many charities across the sector. Trustees and executives are being left in limbo, not knowing the future of current funding and needing to find alternatives which are thin on the ground. As funding plans which looked secure for years threaten to dissolve almost overnight, the threat of disruption to vital services grows day by day.’

Clarity is absence from the process

So far, the government has made only vague and piecemeal statements about the future of EU funds. In 2016 HM Treasury pledged to continue to support projects which are agreed up to the point at which the UK departs the EU – subject to being ‘value for money’ and ‘in line with government’s priorities’. The 2017 Conservative Party manifesto also promised to use EU funds that come back to the UK after Brexit to create a ‘Shared Prosperity Fund.’ What priorities such a fund would have, what causes it would support and how it would function remains totally unclear.

What has to happen right now to provide much needed clarity?

Umbrella bodies like NCVO, ACEVO and UKCF have already called on government to use the money previously spent on European Structural Funds to create a successor to the European Social Fund. Others have urged government to ensure that EU funding currently accessed by charities and social enterprises is replaced from 2019 onwards.

DSC argues that some simple steps could be taken right now to provide charity trustees with clarity, to help them plan effectively.

DSC calls on the government to:

  • Clarify the level of funding for charities that will be maintained throughout the Brexit process, including a clear and detailed definition of the conditions under which present EU funding will be guaranteed.
  • Provide a credible commitment on how EU funding will be replaced in full after the UK’s departure from the EU, and a clear timetable for this.
  • Consult with the charity sector and the wider social sector in developing the potential UK Shared Prosperity Fund. This includes the strategic purpose, aims and priorities; how will it be administered; and how it will support critical social causes.

For the charity sector:

  • Identify your potential exposure to a loss of EU funding as part of strategic planning, involving your board if there is a significant risk. Look for partners which may be in a similar situation, in your sector as well as across sectors.
  • Provide evidence to umbrella bodies (in your sector and for the wider charity sector) as well as local MPs in constituencies where EU funding supports key services. Describe the potential impacts of non-replacement of EU funding on your beneficiaries.
  • Ask government via umbrella bodies and local MPs to provide a credible commitment on how EU funding will be replaced in full after the UK’s departure from the EU, and a clear timetable for this.

The full research paper, titled ‘What does Brexit mean for UK charities’ European Union funding?’ can be downloaded free here.