As the dust settles, a bit, following the United Kingdom’s June 23 referendum as to whether or not the country would leave or remain in the European Union, it has become apparent that promises made during the preceding campaign might not be upheld, and that uncertainty will be the norm for a while. Once Article 50 of the Lisbon Treaty is activated by the UK, if it ever is, negotiations will begin between the EU nations and with the UK on how this exit will unfold. Current Prime Minister David Cameron has said that no negotiations will take place until October, when he will step down and a new government put in place. For the time being, we are left to wonder how the future might shape up. As an EU/American citizen living in London and interning for an international NGO, I want to explore what the consequences of Brexit might be for the Development and humanitarian sectors. Here are a few key points that have been discussed around the office I work in.
Staff from the EU. Large international organisations have such a reach that many of the staff that work in their UK offices are from abroad, quite often from EU countries or North America. With the campaign promises of more controls on the UK’s borders and a reduction in immigration, it has been wondered what that could do to the workforce of our NGO. Short answer is that there is not likely to be much upheaval as the free movement of labour will need to continue if they wish to remain in the European Economic Area (EEA). In the end, Brexit might just mean more paperwork and administrative tasks for human resources departments across large international NGOs.
Exchange rates. Since it was announced in the early hours of June 24 that the UK had voted to leave the EU, the uncertainty of what that meant led to a drop in the value of the British Pound. At the time of writing, £1 = USD $1.29. This is the lowest the Pound has been in decades. The impact that this could have on humanitarian organisations is dependent on what currency they use. Overall it means that you don’t get as much from the Pound as you used to; for organisations that transfer money to country offices abroad, it means those field missions might not get as much as they used to. On the other hand, if an organisation is moving money (donor contributions and grants) towards the UK, it could mean they get more bang for their buck. Salaries of employees who work remotely could potentially be affected if their British salary is being converted into another currency before reaching them. Since the market has only had just over a week to digest the news, this could either become even more significant, or the Pound could rebound, and render the point moot. Either way, it is important to keep an eye on it.
“You don’t get as much from the Pound as you used to, [which] means those field missions might not get as much as they used to”
Donors. Lucky for the organisation that I am currently with, the UK HQ doesn’t particularly rely on EU funding for its programmes. Additionally, because it is part of a network of HQs, two of which are located elsewhere in the EU, funding from the EU could still be received by first being channelled to one of those two offices. UK-only organisations that rely heavily on EU funding are those that stand to be most affected. But again, this is an uncertainty until negotiations take place and agreements are made. Until then, funding contracts will be honoured, but what happens to those that are long term and go beyond when negotiations between the EU and the UK are done? Will new contracts for funding be signed within the next few years while negotiations are taking place? As for DFID, the main arm for humanitarian and Development aid in the UK, how will their grants be affected? A new government will be put in place when David Cameron steps down, and with it new policies. Additionally, with the UK leaving the EU, the government’s overall foreign policy might be different and therefore affect which countries get priority attention. While all this is being ironed out, there is a chance that key pieces of DFID work might be put on hold, which could have an impact on the work of NGOs and their strategies.
Fundraising. Securing donor funds from regular people relies on their ability to give. In the wake of Brexit and how the economy has performed since, and the projections of economists from here, some adjustment may be needed in the way fundraising is done. With uncertainty as to whether the economy will stabilise or whether there will be more downward spikes, like those we saw immediately after the announcement of the referendum outcome, the wallets of those who tend to give might be affected. Less money for them would mean less money for humanitarian organisations, as there would be a reluctance and an inability to give. This is all dependent on how the economy performs and therefore something else that will need to be followed with a watchful eye. Additionally, and possibly not as significant, is how an organisation is perceived by those looking to give. In the days after the referendum, the incidence of racial abuse and hate crimes rose. Could these be isolated incidents because of the rhetorical heat of the Brexit campaigns, or is this going to start a trend? Will NGOs who spend their money on programmes abroad be looked at negatively because they fund programmes that help migrants and refugees, and many other Development/humanitarian programmes?
“Securing donor funds from regular people relies on their ability to give”
My hope is that the referendum outcome does not negatively impact Development and humanitarian funding; that any agreement between the EU and the UK, if the UK follows through and invokes Article 50, will ensure that UK organisations continue to be able to apply and receive funding from ECHO and European governments. The humanitarian/Development sector exists to help the most impoverished and marginalised groups around the world, to help to provide them with the basics of life. A decision for one country to leave the European Union should not be to the detriment of those who are already the most in need of aid.
Vincent Fevrier is a humanitarian passionate about using technology to improve effectiveness in the field. He has an MSc in International Disaster Management from the University of Manchester. Read more by Vincent.