How does Brexit affect charities?
Brexit has had a knock-on effect for many sectors across the UK, and the third sector is no exception. Before Brexit, some charities (those not receiving funds from the EU) believed that the likelihood of them being affected by Brexit was low. The thinking behind this made sense to an extent, however the very probable reality is that they will be affected indirectly in various ways. Let’s briefly consider the economic uncertainty surrounding Brexit and what exactly it means for UK charities.
The economic impact
All the way back in 2016, a CAF survey revealed that 55% of charity leaders believed that Brexit would have negative consequences on their organisations, with 29% certain that donations would drop as a result. Whilst predictions on the economic success of post-Brexit Britain have waxed and waned ever since, the consensus of experts is now solidified – leaving the EU will have a detrimental effect on the UK’s economy in the short/mid-term, and is more uncertain for the long-term. This is demonstrated by a recent LSE study, which surveyed the views of the UK’s and EU’s top economics; it showed that 86% of respondents believed that the UK’s economy will be at least several percentage points smaller in 2030 than if it had remained in the EU.
The consequence for charities
As we’ve written about before, a weak economy has a double hit on charities. The first is from a fall in donations, and the second is from a greater demand on services. In essence, charities are stretched to breaking point during periods of economic hardship. And if Brexit wasn’t already hard enough for UK charities, the coronavirus pandemic has added yet more pressure. In the words of NCVO’s latest report ‘The Road Ahead 2021’, “This means charities and the people they support should plan for an uncertain and challenging economic environment for the foreseeable future. The legacy of the crisis will impact on the public finances for years to come.”
Hope for the future
Despite the challenges of this unique situation, there are reasons for UK charities to remain hopeful. For a start, donors don’t appear to have reacted to adverse economic conditions as negatively as predicted. Whilst data on Q1 2021 is still forthcoming, CAF’s 2020 report shows that donations kept fairly stable throughout 2020 (when compared to previous years), and even increased in the period January-June. Although this relates to the period before the UK’s departure from the EU, it shows something important; that UK donors continue to donate even when times are tough.
And for when public generosity wanes, there’s a wide range of government support available for UK charities. Alongside COVID-specifc relief funds, the government is set to replace previous EU schemes designed to help the third sector. The European Social Fund – which gave more than £4.35 billion to UK causes between 2014-2020 – for instance, will be replaced later this year by the UK Shared Prosperity Fund, which will allocate around £1.5 billion to UK organisations annually.
Another consequence of the past 12 months has been the rapid adoption of new technologies by charities. With in-person events cancelled, charitable organisations have had to quickly adapt their fundraising strategies. As cash donations dropped by over a fifth between March and April 2020, donations made online or through apps skyrocketed. Charities turned to social media, online auctions, and their websites, as well as contactless donation technology (according to CAF, 6 in 10 people surveyed considered credit/debit card payments as more hygienic when compared to using cash) to raise funds. Online funding platforms, moreover, saw a huge boost in popularity. JustGiving pages, for example, raised over £180 million in 2020, whilst DONATE saw its donation increase five-fold to over £1.2 million.
A brighter Brexit
Despite the obstacles posed by both Brexit and the coronavirus pandemic, charities will still be able to raise the funds they need to provide their services. By making technology a core part of their fundraising operations and staying atop of government-backed support schemes, they’ll meet the demands of the moment, and will continue to deliver on their mission statements.
GoodBox believes that technology can help charities to improve their fundraising. That’s why we provide organisations such as The Natural History Museum and The Church of England with tap-to-give contactless donation terminals. Our innovative tech helps charities to ditch cash and coins in favour of contactless card payments. Interested? Sign up to our newsletter for regular fundraising updates or feel free to drop us a message – we’re here to help.