We define philanthropy as the giving of resources in an engaged and strategic way for maximum impact and in a tax efficient manner. It can include the giving of money, assets, time, talent, voice and one’s social capital. We believe in the power of philanthropy as a great social connector and the source of many great opportunities.

City Philanthropy

A Wealth of Opportunity

The Brexit Effect: What the Leave Vote means for UK philanthropy

Jul 8th 2016

Dr Beth Breeze, director of the Centre for Philanthropy at the University of Kent considers the effects of the Leave vote on donor motivations, in the first of a series of articles on the Brexit fallout and its impact on philanthropy.

Reflections on what the referendum result means for the charity sector are mostly focused on the resulting uncertainty and turmoil in our political and economic spheres. An operating environment in flux and disarray is clearly not conducive for any type of organisation, least of all charities that are typically over-stretched by demand and under-resourced to meet that demand.

A particular concern is the loss of EU funding for charities, estimated at around £200m a year, plus the end of EU funding for economic development that was skewed towards the poorer parts of the UK. Others point out that social unrest related to the result – such as a rise in reported racial tensions and hate crimes, and newly emerging fractures within communities – also creates a bigger role for charities working in those areas.

So the demand-side of the charity sector is undoubtedly affected by recent events. But what of the supply-side: the donors? I have been studying major donors for a decade, and produce an annual report tracking trends in ‘million pound donations’ made by UK-based donors and given to UK-based charities. The research indicates a number of potential negative impacts on the outlook and decisions of individual major donors.

First and foremost, Brexit reignites longstanding fears that gifts will be used to replace lost funding, rather than to enhance the public sphere. Donors want to make good things happen that would not otherwise have happened; they want their impact to be additional, rather than compensating for cuts in public spending. Research into ‘why rich people give’, conducted with Theresa Lloyd, finds that wealthy givers aspire to be a catalyst for change. If we go into recession, some donors will take a ‘needs must’ approach and step in to make up shortfalls. But a call to help ‘plug gaps’ is deeply unmotivating for those whose philanthropy is driven by a desire to make the world a better place.

Secondly, anything that affects donor confidence in what can be achieved with their gift is bad news for encouraging philanthropy. Charities tackle very complex and deeply entrenched social and environmental issues – if they could be easily solved by other means, they would have been. So a key task of fundraisers is to demonstrate that their organization has the capacity to achieve success. The less achievable the mission of a charity seems, the tougher it is to raise funds. Back in February 2016, heads of major international development charities warned of the consequences of a Leave vote noting that private donations to the likes of Oxfam and Save the Children are multiplied by EU funding, making a positive impact more likely. The opposite scenario could dent the confidence of private donors who understand the enormity of tasks undertaken by charities, and may wonder if their contribution – however generous – is actually worthwhile.

Thirdly, despite greater public awareness of service-providing charities, many are instead focused on campaigning, believing that systemic change is a more sustainable approach than ‘sticking plasters’. But for the foreseeable future, with talk of soft Brexit, hard Brexit or even no Brexit after all, it is not clear which policymakers campaigners should be targeting. If I were a funder of, say, an environmental campaigning charity, would now be the right time to pay for lobbying in Brussels? And with tumult at the top of all our domestic political parties, donors may well question the value of funding any campaigning work until there is clarity about who is in charge.

The overall impact of the Leave vote on philanthropists is – as in every other area – unclear as yet. But it seems unlikely to create a conducive environment for giving, and may well deter donors at a time when demand for charitable action is rising.

Article type: