£1B of income at risk for UK NGOs

An estimated £1 billion ($1.3 billion) of U.K. NGO funding is at risk — around a sixth of the sector’s income — according to estimates from one infrastructure agency. The culprit? Cuts in both EU and U.K. government funding. This analysis comes from Tim Boyes-Watson, global director of insights and influence at Humentum, which supports NGO core functions such as HR and finance. He said that the funding cuts — combined with a drive toward greater local implementation of development — meant that many U.K. NGOs would need to look at a fundamental change to their business model. He estimated that the amount of EU funding at risk due to Brexit was around €500 million a year, equivalent to around £417 million, or $567 million. In past years, he continued, U.K. NGOs received around £2 billion in ODA, and if this amount falls proportionately to the cuts, the reduction in revenue could be around £600 million. In addition, U.K. organizations potentially face falling income from sources such as public fundraising and their retail operations, which have been hit by COVID-19. Oxfam GB, which runs the largest chain of shops among NGOs, said its gross retail income had fallen by £54 million in the fiscal year to March 2021, compared to the previous year. The income of all U.K. international charities combined is around £6.05 billion in the fiscal year 2018 to 2019, according to the UK Civil Society Almanac. The almanac is produced by the National Council for Voluntary Organisations, the membership body for U.K. charities, and is based on accounts filed with the Charity Commission, the United Kingdom’s nonprofit regulator. Members of Bond, the membership organization for U.K. NGOs, have a combined income of around £4 billion. Boyes-Watson said that the 40 largest NGOs, which receive almost all Foreign, Commonwealth & Development Office funding, also have a combined income of around £4 billion. Boyes-Watson said that despite the risk to funding, “but almost no one has merged or gone bust.” He theorized that the scant signs of merger or closure among voluntary organizations could be because most of the cuts were yet to hit the sector. “Many NGOs working to support marginalised communities facing conflict, the pandemic and poverty no longer receive UK aid thanks to the cuts and these decisions have been made before we have even seen the International Development Strategy,” said Zoe Abrahamson, senior funding adviser at Bond. “Decisions around what should be cut seem to be political, opaque and rushed, rather than based on who needs UK aid the most.”