From accessing new funding to reforming tax relief on donations, we look at how Brexit is impacting charity fundraising
The National Council for Voluntary Organisations (NCVO) Road Ahead for 2021 report highlights the significant effect Brexit is set to have on charity revenue and the ability to raise funds. It cites latest predictions from the National Audit Office that there “will be significant disruption to UK and EU trade”.
The report suggests that supporters will have less money to donate, corporate partners will have less money to give, and there will also be disruption to public sector and major governmental grants available to the sector.
“This means charities and the people they support should plan for an uncertain and challenging economic environment for the foreseeable future,” warns the NCVO’s Road Ahead 2021 report. “The legacy of the crisis will impact on the public finances for some years to come,”
The threat of economic instability amid Brexit comes at the worst possible time – as UK charities tackle unemployment, as well as increased demand for support and reductions in fundraising caused by the COVID-19 pandemic.
Charities are also experiencing a period of digital acceleration, which includes the need to invest in remote working tools amid a trend for flexible working.
Furthermore, low Bank of England interest rates make it cheaper for charities to borrow money, but their pension schemes, savings, and investments are taking a hit. Meanwhile, the spectre of rising taxes means people will have even less to spare for charity donations.
Rising unemployment also adds to demand, with the UK’s most vulnerable communities already hit hardest by recession. According to the Resolution Foundation, Black, Asian and Minority Ethnic (BAME) communities are among the most impacted, with 22% of BAME staff losing their jobs last year.
The government has looked to replace major EU structural funds, including the European Social Fund, that were being used by charities in local areas to support communities.
Between 2014 and 2020 EU structural funding was worth more than £4.35bn to the UK.
This lost revenue stream is to be replaced with the UK Shared Prosperity Fund (USPF), that is due to launch in 2021. This will initially start with ploughing £220m into local areas via pilot initiatives, eventually at least matching EU funding, with the aim of totalling £1.5bn a year.
But the NCVO warns that any focus on supporting marginalised communities and the role charities will play in the pilots is “yet to be determined”.
The NCVO urges charities to ensure they fully assess how Brexit will impact on their work and the lives of beneficiaries over the coming years.
It adds: “If your charity has received EU funding in the past, have you thought about how your organisation is positioned to participate on the UK Shared Prosperity Fund.”
With uncertainty over their access to funding through the USPF, charities face a revenue vacuum. Already digital has been used effectively by charities amid the COVID-19 crisis to pivot fundraising online. The same innovative use of digital is suited to engage supporters and generate funds while uncertainty continues over how EU funding will be replaced.
Latest data from online donations platform JustGiving shows the potential of shifting resources to online fundraising. It revealed that in 2020 it saw 18,927 pages created and £180m raised.
Meanwhile, online fundraising platform DONATE saw donations rise five-fold in 2020, from £213,897 to £1,280,872.
Among charities to successfully turn to online fundraising in recent months is the Scouts, which raised £1.8m through its #RaceRoundTheWorld appeal to fundraise for its network of local groups.
We’re very pleased that £1.8m worth of funding is available for Scout Groups in need. Find out more: https://t.co/aiq6X9doW2.— The Scouts (@UKScouting) January 11, 2021
A huge thanks to the @PearsFoundation and @DCMS who’ve contributed £1m to Scouts as part of the government’s £750m charity package #CommunitiesCan (1/2) pic.twitter.com/nmzZPMM4iL
Another potential opportunity to maximise fundraising post-Brexit is through taxation, according to charity sector organisations.
A joint statement by the Charity Tax Group and Charity Finance Group called on the Chancellor Rishi Sunak to design a tax system in the light of COVID-19 and Brexit “that maximises the valuable impact of charity…and does not undermine it”.
Recommendations include protecting VAT and other business rate reliefs. They also want the government to continue investing in Gift Aid, so that charities can continue to receive the extra income from this incentive through online fundraising.
They also want the government to extend the current zero VAT rate on social media advertising to charities so that they can receive further relief when promoting online fundraising campaigns and other communications online.
To minimise Brexit’s impact on the third sector’s ability to raise funds, charities are advised to ensure they are able to influence the Civil Society Forum, which EU member states and the UK government are committed to setting up as part of the UK-EU Trade and Cooperation Agreement, which was signed at the end of 2020.
This aims to regularly discuss issues including sustainable development, the economy, human rights, and environmental and social matters. How charities are able to support increasing demand amid a changing fundraising landscape is set to be a key issue.