Brexit: Where are we now?
Two years on from the referendum on whether the UK should leave the EU, nine months away from it becoming a reality, there remains huge uncertainty about the UK’s post-Brexit future.
Foundations have been proactive in taking steps to consider the implications for both themselves as grant makers and the communities, organisations and movements they support. Examples include the funders supporting Unlock Democracy’s work to ensure democratic scrutiny of the Withdrawal Bill, EDF’s analysis of the withdrawal of funding for human rights and equalities activity, and Collaborate’s research into how to foster positive social change in the current climate.
In this blog, we look at two aspects of Brexit affecting the wider environment in which foundations operate: the future of EU funding and the workforce of the voluntary sector.
The voluntary sector currently receives around £300m in funding from the EU, according to NCVO’s estimates based on the financial year 2013/14. This figure is likely to be lower than the real value; charities may not describe funding that originated in the EU in their accounts (for example if it has come via an intermediary such as the Big Lottery Fund), or there might be match funding or sub-contracting arrangements that are not included here.
EU funding comes from a number of pots administered by both the European Commission and by the UK government. Most notable among them are structural and investment funds like the European Social Fund, the European Regional Development Fund, and the European Agricultural Fund for Rural Development, and programmes such as the Rights Equality and Citizenship Fund and the PEACE fund that has supported a range of projects in Northern Ireland.
The impact of these funds not being replaced would be significant. Any gap in the funding ecology could lead to a rise in demand on foundation resources – which many ACF members are already experiencing – or to the withering of voluntary organisations and types of social capital that are not sustainable without this source of income.
Foundations do not have the financial capacity to fill that gap. Although foundation giving hit a record £2.9bn in 2015/16, the value of EU funding represents at least 10% of that total (and most likely far more). Foundations have their own charitable missions and objectives that do not necessarily map onto government priorities or geographical areas that may be hard hit.
The sharpest impact of a change in the funding ecology will be felt by beneficiaries. EU funding is currently helping to deliver projects that: address mental and physical health issues; work with those experiencing homelessness; help reintegrate ex-offenders; develop work skills of people with learning disabilities; and much more. If EU funds are not replaced in a way that is accessible to the voluntary sector and that continues to prioritise issues like these, the impact will be immense.
The Conservative Party outlined in its 2017 manifesto the intention to create a Shared Prosperity Fund to replace some of the structural funds. The government has since given assurances that projects signed before the UK leaves the EU will continue to receive funding that has been committed.
The voluntary sector is asking for greater clarity on these plans. In December, ACF endorsed a position paper on the design of a successor to the European Social Fund, which invests in education, training and employment support and from which many voluntary organisations receive funding. The paper, produced by a working group led by NCVO and ERSA, set out key principles of what a successor fund should look like. Key for ACF was that grants are the preferred delivery method and that the fund continues to promote social inclusion.
ACF also took a small group of members concerned about social inclusion to meet with the Office for Civil Society and put forward the benefits and successes of funding in this area. We are keen to continue feeding in foundation expertise as thinking in this area develops. A consultation on the future of EU funding is expected later this year, to which ACF will respond and call on member input when it opens.
The effects of Brexit on the charity workforce are starting to emerge. NCVO’s Civil Society Almanac found that 7,800 EU nationals have left the voluntary sector since the referendum took place, marking a change in direction following steady rises in previous years.
Research from the IPPR finds that 4% of the charity workforce is EEA nationals. This is concentrated in the fields of social work and residential care, with a considerable number involved in education and membership organisations too. EEA nationals are likely to be young, female, and highly qualified, and unlike the wider population of EEA nationals in the UK, they are more likely to come from older member states like France and Germany.
We don’t know what immigration procedures for EEA nationals will look like, but the research sets out four possible models and finds that in each case, many charity workers would be ineligible to work in the UK, given their types of work and levels of income.
Foundations might consider what any future immigration policy might mean for the organisations they fund and how they might best support them, especially those funding social work or residential care. Legal fees and visa applications can be expensive and resource intensive, and the labour market may become more competitive if the composition of the workforce changes, potentially leaving charities struggling to recruit. Foundations may indeed continue to feel rising demand for their resources as charities grapple with the financial and non-financial elements of maintaining a skilled and satisfied staff team.
Greater clarity is emerging as the Withdrawal Bill makes its way through the Houses of Parliament and negotiations continue. ACF will continue providing updates for members and exploring the implications for foundations, intervening strategically where necessary. If you are interested in discussing any of the issues above further, please contact firstname.lastname@example.org.
Policy and Communications Manager, ACF
Update (31 July 2018)
Since this blog was first published, the Withdrawal Bill has passed and become the European Union (Withdrawal) Act 2018.
There have also been further updates on the progress of the UK Shared Prosperity Fund, with a consultation expected in the autumn. In a written statement, Secretary of State for Housing, Communities and Local Government James Brokenshire said that the Fund will aim to address inequalities between communities by raising productivity, that the devolved nations will be engaged in its creation, and that in England it will be guided by the priorities identified by Local Industrial Strategies.