Chief executive Kirsty McHugh spoke at NPC event Is the social sector ready for Brexit? in November, saying that charities faced both risks and opportunities from the UK leaving the European Union but that the biggest risk was the loss of the European Social Fund.

She said that while a consultation on the UK’s replacement for the European Social Fund, the UK Shared Prosperity Fund, has faced delays, it could be consulted on before Christmas. Few details of the Fund are yet known, such as the money available, how it will be allocated and who will run it, making it crucial for the sector to speak up when the opportunity arises.

Figures shared by McHugh showed that the European Social Fund was worth £4-5 billion to UK charities between 2007-13, and an estimated £3.5 billion for 2014-2020.

The pressing issue of Brexit meant, she said, that the government was unable to devote enough time to considering important social issues:

“It does not have the bandwidth to do the thinking in relation to some of the more pressing social issues at the same time as Brexit.”

Urging UK charities to speak out, McHugh said:

“We really do need a decent successor to the ESF. When that consultation comes out, we need to respond in great numbers. Those of us who have the greatest voice need to make the greatest noise, because I am still worried that someone in Number 10 will make a decision about that pot of money and that will affect all of us.”

Led by the SCVO, 20 representatives attended from 15 organisations including ProjectScotland, Enable Scotland, RSPB Scotland, Carers Trust, and the Scottish government. They were also joined by WCVA and NCVO.As well as discussing the threat Brexit poses to the sector, the delegation emphasised their need to continue links with Europe once it has taken place.

The two-day visit saw the delegation meet with the European Commission, European Parliament, and European Civic Forum through a programme of events. These included a reception in the European Parliament Building, hosted by Alyn Smith MEP to help fellow MEPs from Catalunya, Austria, Germany, France, Ireland, and the UK understand Brexit and Scotland’s situation, as well as a networking event at the European Civic Forum with civil society partners from across Europe. Events also took place exploring common challenges faced across Europe and tackled by civil society.

In a blog post on the visit, SCVO Parliamentary public affairs officer Craig Wilson said:

“We wanted to let our hosts know that Scotland’s third sector is overwhelmingly pro-European and that we want to ensure a strong and dynamic future relationship with them – regardless of the final Brexit outcome. At the same time, we wanted to make clear our frustration at the lack of space for civil society in the ongoing debate and to ensure our voice is heard (and concerns understood) as negotiations proceed.”

As the dust settles, the UK charity sector is adapting to a new parliament headed by a new Prime Minister and, announced this week, the re-allocation of the Charities Minister from the Cabinet Office to the Department of Culture, Media and Sport.

According to a briefing from the umbrella body NCVO, potential implications for charities and community groups from the Brexit referendum include political uncertainty, slow progress on government policy change, and potential financial challenges.

Concerns raised about the loss of income

Initial reactions were strident, with NCVO’s chief executive, Stuart Etherington stating that “the repercussions for our politics, society and economy will be felt for years, even decades” and the Association of Chief Executives of Voluntary Organisations (ACEVO) called for an urgent summit as to how funds would be sourced to replace the loss of EU funding, estimated to be worth over £200 million.

Paul Palmer, professor of voluntary sector management and associate dean for ethics, sustainability and engagement at Cass Business School, said that charities could face a ‘double whammy’ of reduced government funding and falling income from donors, combined with increased demand for charitable services. He also warned that, if house prices fall, the value of legacy income would also decline.

Palmer said that the international development charities could be most at risk of the adverse financial implications of the EU referendum, especially if further government austerity was to lead to cuts to the international aid budget.

Speaking at the Institute of Fundraising’s annual convention, Tim Hunter, director of fundraising at Oxfam, voiced his concerns about the impact of the fall in value of the sterling against other major international currencies.

“Most of our [Oxfam’s] income is in either pounds or euros and most of our expenditure is in dollars,”he said. As such, the charity will likely need to spend more of its reserves than usual to continue its work.

Rallying calls from sector leaders to work together

Amid the concerns raised, there has also been some optimism, including the potential to create a more beneficial framework for VAT legislation for charities, and rallying among charity leaders for the sector to drive and shape the sector’s future.

CAF chief executive, John Low said:

“While we now have certainty over the referendum result, the repercussions of Britain’s decision to withdraw from the European Union are far from clear.

“Such a change will inevitably cause a period of uncertainty, but is also likely to present opportunities which charities, as always, will be ready to bring people together and tackle some of society’s greatest challenges.”

Among four priorities CAF has set out for government to address in the wake of the referendum result, CAF urged the government to commit to EU rules which make it easier for people to donate to causes in other European countries and to provide funding for charitable work which has been reliant on EU money.

NCVO has also published a blog on five things that charities can do.