On December 31, many of us around the globe were happy to turn the page on 2020. Last year has been challenging to say the very least and of course we all hope for a brighter new year. However, in reality, apart from the 0 turning into a 1, not much has changed.

For the time being we still face the same challenges as we did last year, trying to keep our organisations afloat, fighting to mitigate the effects of the health crisis, so we can continue to serve those most in need. Below we set out what to expect from the EU under the Portuguese Presidency.

In the November issue of Fundraising Europe we outlined what the European Commission’s Work Programme means for civil society. Amongst other proposals, the Commission tabled plans for A European Pillar of Social Rights, which includes an action plan towards socio-economic recovery and resilience in the medium and long term, and an action plan for a social economy, aiming to enhance social investment and to support social economy actors. This social approach is also adopted by the Portuguese Council Presidency.

On 1 January, Portugal took over the Presidency of the EU for the coming six months and presented their priorities. Portugal reiterated the focus on solidarity, convergence, and cohesion and set out a number of key action lines. Amongst these action lines is Resilient Europe, which aims to promote Europe’s recovery, cohesion and values. The Presidency wants to start the execution of the Multiannual Financial Framework and the EU Next Generation Instrument as well as the Recovery and Resilience Facility. Besides these funding instruments, the Portuguese will also focus on a number of policies that are relevant to charities, philanthropy, and NGOs.

In the Justice and Home affairs department, Portugal will focus on the implementation of the EU Action Plan on the prevention of Money Laundering and terrorist financing, which has been a stone in the shoe of the sector.  The Economic and Financial Affairs department will aim to tackle a number of key issues as well, such as the fight against Tax Fraud, evasion and avoidance, and Fair and Simple Taxation. Under Social Europe, the Portuguese aim to strengthen the EU’s social model, focusing on a response to the social consequences of the pandemic. The implementation of the European Pillar of Social Rights will be given political impetus at the Porto Social Summit which will be organised in May of this year.

We welcome the stronger social focus of the Portuguese Presidency as, now more than ever, nonprofits need the best possible environment to protect and build philanthropy and to strengthen their roles in the recovery from the Pandemic. We will closely monitor any policy developments and will aim to identify potential supporting measures and opportunities at EU level. As the Portuguese Presidency starts work and the European Commission has begun the implementation of its Annual Work Programme, more tangible measures will become visible.

Patrick Gibbels, Gibbels Public Affairs

About Patrick Gibbels

Patrick is EFA’s public affairs columnist in Brussels. He is the director of Gibbels Public Affairs. Follow Patrick @GPA_Brussels.

EU Structural Funds make up over a quarter of the EU Budget and are intended to support economic development. The Funds consist of the European Regional Development Fund (ERDF) and the European Social Fund (ESF) and they aim to rebalance regional social and economic disparities. 

The Chancellor announced back in 2016 that government would continue to fund existing EU Structural Funds programmes scheduled to finish after Brexit, and that it had committed to a UK Shared Prosperity Fund (UKSPF), which would serve a similar purpose to the existing European Structural and Investment Funds.

However, a consultation on UKSPF has been repeatedly delayed. In a letter to the Chancellor, which also includes a number of other key proposals, the group said that while they welcome the government’s commitment to match, at a minimum, the size of EU Structural Funds in each nation, charities are urgently awaiting more details of the UKSPF, including the time period over which £500m earmarked for disadvantaged people is spread, and the consultation on how the programme will be designed and delivered.

They also seek assurances that other smaller funds are also replaced to ensure disadvantaged people receive the support they need post-Brexit.

With the UKSPF scheduled to begin in April 2021, the letter urges that its consultation, which has been repeatedly delayed since 2017, becomes a “key priority for the government in order to help avoid gaps in funding and therefore the loss of vital support for communities across the country.”

The letter calls for the government to put communities and the charities that represent them at UKSPF’s centre, stating:

“Communities and charities that represent them must be at the heart of the UKSPF, including the delivery and design of the programme, with significant devolved funding and community control. A more localised approach would harness local assets, and provide investment for growing the capacity of communities and local organisations to lead change in their neighbourhoods. It would unlock opportunities for areas, which have often been overlooked, and for people facing barriers to and in the workplace. It would also enable community-led activity and community businesses to flourish.”

The full letter, along with the other proposals can be read on the Charity Finance Group’s website.

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.”

With Brexit negotiations still underway, the European Civil Protection and Humanitarian Aid Operations(ECHO) has inserted the below clause in its grant agreements with UK organisations:

“For British applicants (non-governmental organisations): Please be aware that you must comply with the requirement of establishment in an EU member state for the entire duration of the grants awarded under this Humanitarian Implementation Plan (HIP). If the United Kingdom withdraws from the EU during the grant period without concluding an agreement with the EU ensuring in particular that British applicants continue to be eligible, you will cease to receive EU funding or be required to leave the project on the basis of Article 15 of the grant agreement.”

With concerns that this will discourage UK organisations from bidding for relevant funding, ECHO has offered to fund the post-March 2019 outputs of any programme, where a UK organisation is the lead consortium partner or sole implementer.

This will apply only in a no deal scenario when ECHO terminates funding based on the above clause at the time of the UK’s exit from the European Union, and is aimed at enabling UK humanitarian aid organisations to continue bidding for funding from ECHOs core budget, without undertaking unmanageable financial and programmatic risk. Full conditions are published online, which include a time limit on funding applications made between 23 August 2018 and 29 March 2019.

The age-old aphorism that the rich get richer and the poor get poorer seems to now include charities.

A new breed of mega-charities are growing apace both in number and scale, with large international NGO brands based across European capital cities and large national charities outpacing their smaller rivals.

Income rises for large charities
Whilst small charities with an annual income of less than £1m have seen a drop in their income, the UK’s largest charities, with an income of over £10m per annum, are growing by some 3.7%, according to analysis by the National Council for Voluntary Organisations (NCVO). And on top of this, mega-charities in the £100m and over bracket have seen their income increase by a staggering 26%.

In the UK, the media has warned us that the public has a huge disquiet about fundraising, and the Fundraising Regulator along with the Information Commissioner’s Office (ICO), which is hard at work issuing rather extraordinary gutter-press style headlines, are combining to curtail fundraising; to the extent that some large charities are now predicting huge falls in income and, it must be said, a consequential massive increase in suffering by those they help.

What exactly is going on? And if the European press follows suite, attacking and undermining charity fundraising practices, what will happen?

Battle for funding
It appears that – on the whole – while people may be more sympathetic to small local charities, the public itself actually prefers to give to large national charities. Of course, bigger charities tend to deal with many of the world’s biggest issues, and they have the ability to fundraise on a larger scale and to be clear about the support they need. But, could this also be because the large national charities can clearly demonstrate their effectiveness and efficiency?

Large NGOs certainly have the resources to monitor and evaluate their work, and this is usually both fed back to their donors and internally to improve their work in the field. So, maybe it’s a matter of trust, in that the public trusts them to solve these large scale problems. This is exacerbated by national and EU government’s programme of contracting out services to large charities, which improves large charities’ advantages of scale.

Public perception
In my consultancy, we are often approached by people setting up their own charity whose overheads are going to be far higher than the larger charities (because they lack the economies of scale), whose ability to do the work is not grounded in experience, and whose knowledge of management is limited. This is not to say small charities are ineffective, just that the public may appreciate the reassurance of donating to better known, obviously well-managed charities.

The public may be seeing that Government has cut social services until they fall apart and individuals are driven to food banks. They then have a real opportunity to help people directly by supporting the larger charities.

If we take cancer as an example, we may all know someone affected by it, but would anyone give to our national health services hoping it will solve the problem? Of course not, we give to the biggest national cancer charities instead. Indeed, the popularity and effectiveness of charities in carrying out work that the state should have been doing may have made them a target for the UK’s new legislation on fundraising practise. But the fact is that that the public is responding well to the sector’s fundraising strategies.

Readdressing the balance
The upshot is that smaller charities may feel larger ones are starving them of funds, but there are many ways of levelling the playing field, particularly by using the internet and focusing on the smaller charities’ unique reasons to exist. Embracing professional fundraising and getting the ‘case for support’ right, both emotionally and intellectually is something the mega charities are very good at, but there is no reason why the smaller charities’ fundraising should not innovate to be even more effective and efficient in their income generation.

About John Baguley
John Baguley is Chair of the International Fundraising Consultancy, author of The Globalization of Non-Governmental Organisations, a Fellow of the Institute of Fundraising (IoF) and an international speaker on fundraising. He has also started First Fridays, Top Table and Wikifund. In 2017 John received a lifetime Contribution Award from the IoF.