Ordinarily I would limit my opinion pieces to matters of a more overtly financial nature however having spoken at the fundraising convention recently on the impact of Brexit I thought I would broaden my observations and share some of my thoughts about the role the sector could, and arguably should, take in the aftermath of the referendum. I should say up front that CFG had no position on whether to remain or exit the EU.
This piece is not going to rake over the coals of the outcome or suggest an alternative should be pursued. Rather as the impact of Brexit will have far reaching and long term consequences for the sector, however implemented, I share my thoughts on what I’d like to see the sector doing in response.
Firstly let me cover the financial bit…my message at the IOF’s convention was that Brexit would undoubtedly have a negative financial impact on the sector in the short term. In areas such as grant making, delivering programmes overseas and the impact a volatile financial market can have on pension deficits, some charities will have already felt a real hit.
For those tied into FX deals on the 24th of June there would have been a loss of cash in real terms. For those with continuing commitments overseas the weak pound to dollar exchange rate will significantly reduce the money available to spend. A pension valuation undertaken in the days following the vote will result in charities having to revisit the question of their solvency and ensure that any increase to their deficit does not tip them over the edge. These elements will peak and trough. I am no economist and I shall not attempt to predict the markets. However charities need to spend time examining their income streams and considering what the sensitivities are if they are to weather this storm successfully.
In that respect we have a good deal of information in the Managing in a New Normal series (previously Managing in a Downturn with IoF and PWC) which chartered the experiences of the sector following the credit crunch. This information, whilst not a roadmap for what will happen, is certainly a useful indication of how the sector responds in financially turbulent times and highlights income streams that may be affected. It’s unlikely that Article 50 will be invoked soon but if it is, there will be a maximum of two years before we depart the EU. We now have a good period of time to reflect and plan.
So be ‘all over’ risk starting now and make sure you really know how your charity’s business model works. For example if your funding comes from the EU, or from a third party reliant on the EU, you need to be thinking about the impact on your operations now. On to the wider issues. In my opinion, those who voted leave and remain, have a common theme – the desire for change.
There is real disquiet about the hollowing out of our regionally based industries, anger at the widening gap between rich and poor, frustration and dismay at the lack of long term investment ( by successive governments of all colours), in infrastructure, and bemusement at the absence of a non-party political solution to the challenges facing our NHS. We all want change. This is where charities come in. I wrote an article in Third Sector magazine back in October 2014 in which I argued that our political system incentivises short term thinking. Politicians are groomed to pursue objectives and policies that have a greater short term impact and which play to the populist mind-set of the day and not to think through approaches that may not bear fruit in their own political lifetime. Charities can smooth out the impact of such short term thinking.
In the wake of Brexit, we are presented with an opportunity to offer solutions and to play possibly the most important role we have had in our entire history. The political landscape threatens Armageddon. Parties of all colours are divided. As a nation we have accused our political class of not reflecting the people they represent. In many regards the division and lack of direction reflects more accurately than ever before what is going on in our cities and villages across the countries of the UK! We appear a divided and socially fragile nation. Let us not be a divided and fragile sector. We have not become detached and disconnected from those we serve and bloated on self-interest. We may, as a sector, reflect a more remain narrative and it may be correct in saying that we are seen as part of the establishment by some. But that is not the whole story. Ask if the community group is seen as elite. I doubt the answer will be yes. The danger in these sentiments is that when we say ‘sector’ we are not referring to the vast majority of charities that actually make it up. It’s like lumping together Tesco and a local corner shop as one. The only thing that brings us together as a sector is our shared focus on social change. We are diverse in what we do, how we do it and in size. If our larger charities are seen as elite we do not help them by peddling that line. The EU referendum is widely seen as being a vote intended to give the establishment a bloody nose more than a real reflection of the population understanding what the EU does and still voting to reject it. This narrative of disconnect and fear risks breaking the very thing that stands a chance of doing long term good in society - charity. We have become wrapped up in a narrative assigned to us, the press coverage, scandal and fear. The gap between perception and reality is wide, it is real and it threatens our very existence.
How do we respond? In my view charities of all sizes are duty bound to speak up. We must intensify or start advocating on behalf of the causes that we serve. At the very time there will be more pressure to be quiet and less opportunity to speak to those in power, we must increase our voices, not silence them. Our efforts should not just be about trying to influence the politicians and regulators but also about influencing and shaping what our communities think and feel. We must not just listen to and understand their challenges, we must find solutions and press all political parties to put the needs of our marginalised and disconnected communities before party politics. We must lead in what we do and not simply be the mouth piece for the loudest or more popular opinions. Of course this is not about patting the public on the head and telling them we know best, it is about genuinely connecting with and co-creating the answers to the most difficult social questions that successive generations and successive governments have failed to crack.
David Emerson, CEO of the Association of Charitable Foundations wrote in a very thoughtful piece; “With hindsight, whatever the outcome of the referendum, it was always going to reveal dividing-lines across our society. We are now able to observe stark intergenerational and geographic differences, disparities in income and education as well as attitudes to immigration. With questions also arising about the stability of the United Kingdom, and the continued existence of substantial EU funding streams, it is clear that working together with the rest of society to promote inclusion needs to be high on our collective agenda.” I would add to that - it needs to be top of our agenda. Society is crying out for a social economy - one that deeply and lovingly serves the whole of society, one that connects us with the world, not isolates us from it. We have a chance to deliver positive change but we must be brave enough to lead in the turbulent times. Do not leave it to others who may appear better placed.
To quote the great Mahatma Gandi, ‘be the change you wish to see in the world’.
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