The decision to leave the European Union is likely to lead to a reduced income for the charity sector, NCVO has warned in a briefing today.
NCVO’s document, Brexit: Implications for the Voluntary Sector warned that Brexit could lead to a reduction in investment income, and therefore grantmaking, as well as a drop in giving if disposable income fell, and a reduction in government commissioning.
It said that the leave vote could easily lead to economic distress which would place extra pressure on voluntary organisations.
NCVO also warned that a general election was likely to lead to changes in political relationships, including new ministers.
The Charity Finance Group also produced a briefing warning of threats to the sector’s income, but also saying that there could be an opportunity for the sector to negotiate a better deal on irrecoverable VAT, which costs charities around £1.5bn a year.
Separately, investment managers warned that charities should react cautiously to falls in the stock market.
“Uncertainty is now certain,” said Kate Rogers, head of policy in the charities team at Cazenove Capital Management. “That means volatility which means probably a slowing of the UK’s economic growth. But this isn’t a black swan event. We’ve seen it coming and we’ve planned for it.
“In terms of the impact for portfolios, diversification is significant. If you hold money in overseas equities, this is actually a good time, because the weakness of sterling is helping those returns. Even if you’re invested in the UK, 70 per cent of the earnings from the FTSE 100 come from overseas.”
She said it was unlikely that interest rates would rise soon, with implications for charities holding cash.
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