Brexit and the funding vacuum

What charities know so far

 

Luke Hall has offered some further indication of what communities will need to do to access funding. This is set to be based around targets and areas being able to agree to outcomes to be achieved.

 

This was given in his answer to a parliamentary question from Andrew Bowie, Conservative MP for West Aberdeenshire and Kincardine, on when Scottish councils can apply for the UKSPF.

 

Places receiving funding will be asked to agree specific outcomes set against targets “within a UK-wide framework,” said Hall. 

 

“They will then develop investment proposals to be approved by the government among a representative stakeholder group. A second portion of the Fund will be targeted differently to people most in need through bespoke employment and skills programmes that are tailored to local need.”

 

This indicates there will be strong potential for employment and training charities to be able to access funding through the UKSPF.

 

 

Second-hand clothing mountain

 

Trade became much more complicated between the UK and EU under Brexit, with organisations facing increasing checks and red tape. This is already causing delays in exporting and importing goods and stocks of good mounting up.

 

It has emerged these trading challenges are having a direct impact on charities looking to raise funds by exporting second-hand donations to EU member states.

 

One exporter told the media that “we’ve got containers sat in port, we’re paying standing charges, our customers can’t have their goods, and we’re not being paid. The business has ground to a halt”.

 

This is reportedly costing charities thousands of pounds in funding that they would ordinarily receive from exporting donated goods to the EU. Given charity shop closures amid COVID-19, the source of funding is especially important to charities in 2021.

 

 

Tax breaks on funding

 

In addition to a funding vacuum, there is a policy vacuum in a raft of areas including employment rights, data protection, and environmental law.

 

This policy vacuum extends to finance legislation impacting on charities’ fundraising operation. Most notably this surrounds the tax breaks available to charities to ensure they can ensure as much of their donations goes towards good causes.

 

Sector bodies The Charity Tax Group and Charity Finance Group have called on the government to ensure that taxation is developed that supports rather than hinders charities.

 

This includes protecting VAT and other rate reliefs and to ensure the government continues to invest in Gift Aid. An extension of the zero VAT rate on social media advertising to charities is also being called for.

 

However, an uplift in Gift Aid looks unlikely. In 2020, a coalition of charities and voluntary sector organisations called on the government to temporarily increase the level of Gift Aid to cope with COVID-19 challenges. But the government indicated that no rise would be forthcoming.

 

Given the funding challenges Brexit is also placing on charities, it remains to be seen if ministers may be more forthcoming in the future regarding financial tax breaks for the sector.