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Brexit poses ‘unprecedented levels’ of financial risk to aid agencies

18 November 2016


Not for turning: The Prime Minister, Theresa May, told the Lord Mayor's Banquet this week that Brexit did not signal Britain "stepping back from the world" but was "an example of how a free, flexible, ambitious country can step up to a new global role"

Not for turning: The Prime Minister, Theresa May, told the Lord Mayor's Banquet this week that Brexit did not signal Britain "stepping back from the w...

CHARITIES engaged in work overseas have been described as facing “unprecedented levels” of financial risk since the Brexit referendum.

Speaking on Tuesday, Christian Aid’s finance director, Martin Birch said that, while the aid and development agency had yet to suffer from the fall in sterling, devaluation was only one of a raft of the potential challenges of Brexit to NGOs.

Officers at the Anglican mission agency USPG have already asked its supporters for more donations, because devaluation means that each pound buys ten to 20 per cent less overseas than it did earlier this year. “Quite simply, the money is not going as far as it did. And there appears to be no promise of a recovery in the value of sterling any time soon,” USPG’s director of fund-raising and communications, the Revd Tim Harford, wrote in a letter to supporters.

Mr Birch said that Christian Aid had taken the precaution last year of buying dollars to spend overseas, but that these would run out by the end of 2016. “We have been protected through most of 2016 against those currency movements, but we have to fall back in line with the reality of the actual value of sterling.”

Tearfund has also expressed concerns. In a statement, its director of fund-raising, Jane Pleace, said: “So far, Tearfund has been resilient to any Brexit fallout, but we are concerned that any further devaluation of the pound may affect our ability to serve people living in poverty and respond to humanitarian disasters in the future.”

But currency movements were only one part of the picture, Mr Birch said. “Brexit has also changed our Government. We do a lot of work with funding from the Department for International Development (DfID) and the EU. That’s another risk which affects our income.”

While conversations with the new International Development Secretary, Priti Patel, and officials were continuing, policies towards NGOs were already shifting, he said. A review published by DfID last week confirmed that a five-year-old scheme where the department provided strategic funding for about 40 British NGOs would end.

The government-relations manager of World Vision UK, Peter Keegan, said that it was vital that ministers continue to work with the charity sector.

“Understandably, there is a lot of uncertainty and speculation concerning the impact Brexit will have on the third sector. However, what we are clear about is the need for Government to work together with charities to ensure that the UK continues to prioritise and champion the needs of the world’s most vulnerable children.”

Ms Patel had reaffirmed her commitment to continuing anti-poverty programmes around the world, Mr Keegan said. The Government must deliver a “generous, fully engaged, and outward-looking post-Brexit Britain”, he concluded.

Christian Aid does not yet know whether its EU funding, which amounted to three per cent of its income last year, will continue post-Brexit, or whether new applications to the EU for funding will be welcome after the referendum result.

Ms Pleace said that Tearfund was working with its partners in Europe to ensure that it had continued access to new EU funding.

Furthermore, if the British economy does slip into recession as the UK’s departure from the EU draws closer — as many experts have predicted — charities’ domestic fund-raising could be hit as people tighten their belts and cut their giving, Mr Birch warns.

“It’s not a surprise to hear that others are going to their supporters and asking for additional contributions. That is a question we are discussing at Christian Aid at the present.”

Ms Pleace said: “Our supporters continue to be incredibly generous, and we haven’t experienced a drop in donations since the referendum. We are very grateful for their continued support, but, of course, we realise that any sign of an economic recession may impact on our supporters’ ability to give.”

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