Brexit, Trump, Elections and Indyref2 – How Scottish Charities Must Weather this Perfect Storm of Uncertainty

These are truly unprecedented and uncertain times for charities in Scotland – a perfect storm created by the relentless pace of change and the biggest political upheaval in a generation.

The results from the snap general election are in: the UK government will be led, at the time of writing, by Theresa May, whilst the political landscape in Scotland was fundamentally changed.

Ever since the Brexit vote the prospect of #IndyRef2, for some, was inevitable (after all some of the arguments for Scotland remaining within the UK included the union’s EU membership).  In March the Scottish parliament passed a motion giving the First Minister, Nicola Sturgeon, the authority to seek to hold a second referendum on independence once the terms of the UK’s exit from the European Union is known.  However the SNP’s loss of 21 seats on 8th June, even though they still securing the largest share of votes cast in Scotland, appears to have reduced the likelihood of #IndyRef2.

The 2014 independence referendum created many areas of uncertainty and had the potential to affect a range of matters which will directly and indirectly impact on fundraising.  At the time I identified four key areas – financial impact, case for support, communication and organisational structures – for fundraising leaders to consider.  On reflection and even whilst #IndyRef2 may never happen these questions, particularly those relating to financial impact, still feel relevant and worth consideration.

In Scotland we have over 23,000 registered charities providing vital services that so many people are dependent upon.  All will be wrestling with the potential implications of what’s gone on in the past two to three years.

Focusing on financial impact, a majority of Scottish charities are currently dependent upon funds provided by grant giving bodies – some domestic and some foreign.

Once the UK leaves the EU, funding from many European sources will no longer be available to our charities.  At this point it is unknown if the new UK Government  will introduce replacement funding programmes or if Brexit will affect statutory funding sources.  Furthermore, it would be right to question if, in the event of a second referendum or a yes vote for independence, domestic funders based outside of Scotland would continue to fund Scottish projects?

Trustees will, rightly, be thinking carefully about the levels of risk they carry.  With questions related to some funding sources, trustees may decide that it is sensible to limit their own funding commitments or to increase levels of reserves held to provide a safety net in future years.

These external developments highlight that too many charities in Scotland are reliant on a few income streams.  Organisations with balanced income portfolios and an eye on tomorrow will be able to ride any storm.  Uncertain times like these underline the importance of diverse income generation portfolios, with appropriate investment, to effective mitigate risk.

Each charity has to assess the best way to respond, in the short or long term, to the inevitable changes coming.  But perhaps the biggest risk to charities in Scotland isn’t Brexit or independence; perhaps the biggest risk is their own decisions on how to deploy their resources and whether or not they will invest in fundraising activities to generate tomorrow’s income.

Gary Kernahan, Consultant