Brexit

Charities and Not-for-Profit

How will Brexit affect EU funding opportunities for charities and not-for-profit organisations?

Depending on the type of Brexit that emerges, there could be significant implications with respect to EU funding opportunities for UK based charities and not-for-profit organisations. Organisations based in the UK may find that they are no longer eligible to apply for EU funding, while organisations based in Ireland may find that there are more funding opportunities available to them as a result. However there are also risks for Irish charities and not-for-profit organisations.

How might Brexit affect UK charities’ eligibility for EU funding and grants?

UK charities must consider the source of any EU funding that they receive and the associated eligibility criteria. Current EU funding streams principally emanate from the EU Commission and include funding for areas such as humanitarian aid, asylum, regional development, alleviation of poverty and developmental aid. Eligibility for grant funding of this type usually takes the form of a call for proposals, which will identify eligibility criteria. Currently, establishment by the organisation in an EU state is a standard criterion for eligibility.

It is important for UK charities in receipt of EU funding, or that intend to apply for EU funding, to carry out an analysis of their continued eligibility and to conduct a risk assessment of the potential impact of Brexit. Some UK charities are currently taking steps to establish an office in the Republic of Ireland as a result of such a risk assessment.

What are the opportunities and risks of Brexit for Irish charities?

Irish charities may find that more funding opportunities become available if organisations based in the UK become ineligible for EU funding.

However there are also risks to Irish charities from Brexit. Irish charities may see fluctuations in sources of income and funding. One possible consequence of Brexit could be a reduction of average disposable income in Ireland, and as a result there may be a reduction in the level of charitable donations. Further, Government funding priorities may change as a result of the response to any fallout from Brexit.

Additionally, Irish charities which have suppliers based in the UK may experience disruption in these supply chains, and may experience difficulties due to currency fluctuations.

Irish charities may find that UK charities that work in a similar area are establishing an office in the Republic of Ireland in order to retain eligibility for EU funding. In such circumstances it may be worth considering whether to collaborate with such charities and enter into a formal cooperation or collaboration agreement.

Why should UK charities consider opening a Republic of Ireland office?

If your charity has conducted a risk assessment and has found that its funding is in jeopardy as a result of Brexit, it may be worth considering establishing an office in the Republic of Ireland. As some of the funding requirements require a charity to be established in an EU member state for two or three years, this is a change that may need to be considered by charities very soon.

Possibilities may include:

  • full relocation to Ireland

  • establishment of a sister charity or a subsidiary in Ireland while retaining a UK presence

  • merger of the existing UK charity with an Irish charity or

  • a management agreement between a new Irish charity and the existing UK charity, whereby the existing charity could be contracted to carry out the work that is the subject of an EU grant to the Irish charity

The Republic of Ireland is an attractive location for several reasons:

  • it is English-speaking

  • Ireland is committed to its EU membership, and EU membership enjoys strong public support

  • there is an established charities regulatory regime which shares many similarities to UK regulation, and which may grant tax exemptions similar to those available in the UK

  • Ireland is a common law jurisdiction similar to the UK legal system and

  • the Irish Development Authority is experienced in assisting organisations to establish in Ireland

Conclusion

Brexit holds serious risks for Irish and UK charities and not-for-profit organisations, and it is important to conduct a risk assessment for your organisation of the potential impact that Brexit might have.

We are happy to assist your charity or not-for-profit organisation with advice related to Brexit, and we have the largest charities and not-for-profit legal team in Ireland. We have previously written about the risks for UK charities as a result of Brexit, and set out information on establishment in Ireland, here, and we were the author of the Irish section of the Advocates for International Development guide “Preparing UK-based NGOs for Brexit”.


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