What Brexit means for the NGO operating environment
9 February 2017
Bond convened chief operating officers and directors of finance at an event at Crowe Clark Whitehill to discuss the implications of Brexit on the operating environments of UK NGOs. The panel of speakers looked at how NGOs will be affected both politically and financially by the UK leaving the EU.
“It’s a time for NGOs to step up”
Jo Rea, head of public affairs at the Overseas Development Institute, kicked the event off by saying that although politics has shifted dramatically and everything is being looked at through the lens of Brexit, technically nothing has changed legally or financially yet.
Jo felt that NGOs should be trying to view Brexit as an opportunity to shape how the UK works, and not to retreat or self-censor. The emergence of a “Global Britain” narrative is our chance to ask ourselves: how can NGOs make the most of this opportunity?
Changing strategies for charities
The uncertainty caused by Brexit means that more organisations are moving away from two-three year strategies towards nimbler frameworks that are regularly updated, according to Pesh Framjee, head of non-profits at Crowe Clarke Whitehill.
Pesh suggested that NGOs need to consider how their strategies will remain relevant in response to Brexit and what the impact on budgets and forecasts will be.
Economic instability and currency risk
Andrew Derry, treasurer of Save the Children International, said that Brexit is just one of many financial risks and may not even be the most important thing driving currency instability. However, right now the pound is at historically weak levels and this poses challenges for NGOs who may receive or spend money in different currencies.
With exchange rates volatile, Andrew said that NGOs need to make sure they have explicit sign off from the Board on their approach to currency risk. To mitigate against the risk, organisations may wish to consider “forward contracts” which involve locking in an exchange rate so you know what you are getting. However, you will need to check with the funder first to make sure they are happy with this approach.
Impact on funding opportunities
Rachel Haynes and Costanza de Toma looked at the funding and political implications of Brexit for NGOs. In 2015 UK NGOs received €186m in funding from the EU. Small and medium-sized organisations are more dependent on EU funding, which generally makes up a bigger percentage of their total income.
If, post-Brexit, the UK leaves the European Development Fund, UK NGOs may be ineligible for development funding for use in 61 countries through the EU. This includes 28 countries on DFID’s high or moderate fragility list, and in 2015 the financial impact would have been €25m.