How UK aid cuts cost one major INGO almost half its income

CARE International UK has filed new financial statements showing how government aid cuts cost it almost half its income — and at one point left it facing uncertainty over whether it would survive. CARE, a poverty reduction charity primarily focused on women and girls, was previously one of the largest INGOs in the United Kingdom. But its latest accounts, which were filed five months late last week, show a drop in income from £62.7 million (about $76.6 million) in financial year 2021 to £38.6 million in 2022 — a fall of 38.5%. The accounts follow on the heels of its 2021 accounts — which were filed 400 days late, in July this year. They also showed a major drop in income, from a high point of £73.9 million in 2020, for a total drop of nearly 50% in just two years. The 2021 accounts indicated that, for the past two years, there had been “material uncertainty” over the charity’s ability to continue as a going concern — in other words, its ability to keep operating — after a sharp drop in funding from the U.K.’s Foreign, Commonwealth & Development Office, or FCDO. CARE is far from the only INGO affected by U.K. aid cuts, which reduced aid spending from 0.7% of gross national income to 0.5%. During 2022, FCDO also pressed pause on all new funding as it wrestled with a Home Office raid on its coffers to pay for an influx of refugees. Much of that spending cut was passed on directly to INGOs. However, CARE was exceptionally reliant on FCDO funding. In 2020 it received £52.9 million from FCDO — more than 71% of its income that year. That funding fell by roughly two-thirds between 2020 and 2022, leaving the charity scrambling to cut costs to compensate. Things were made worse because CARE also had a very low level of free reserves — funds to deal with unexpected surprises — at just £2.8 million in 2021. Other comparably sized U.K. NGOs hold reserves of well over £10 million. But in its latest accounts, the charity says it took several actions to reduce costs, such as transferring programs to other CARE organizations around the world and had managed to increase its reserves even in the face of plummeting income. A CARE spokesperson said in a statement: “After a challenging period, CIUK’s FY22 accounts show the organisation is in a strong financial position. Prompt action and prudent financial management have increased the organisation’s free unrestricted reserves to £4.5m.” The statement also criticized the decision to cut U.K. aid and its impact on beneficiaries. “The accounts do show a significant decrease in income — as a result of FCDO aid cuts from 2021-2022 — but as evidenced by the increase in unrestricted free reserves, the organisation managed that decrease effectively by reducing its expenditure,” it said. “CIUK has been clear that UK Government aid cuts would have a devastating impact on women and girls affected by poverty and crises around the world. It is deeply concerning that the Government cut at least £2.1 billion from gender equality projects up to 2021.” CARE said that gender equality funding was disproportionately affected by the cuts, with funding to address violence against women and girls down by over 40%.