LONDON — Amid growing fears that the United Kingdom could crash out of the European Union without a deal on March 29, U.K. NGOs say they are still unsure about whether they can continue to work with the EU’s humanitarian arm, ECHO.
On Aug. 23, the U.K. government threw British NGOs a lifeline by promising to underwrite new contracts signed with ECHO, after the humanitarian funder said it would cut short all funding to U.K. NGOs if there is a “no-deal” Brexit. In 2017, British NGOs secured €228 million ($258.4 million) in new grants from ECHO’s €2.5 billion budget, according to EU data.
“Our members have no idea on the status of their existing contracts with the EU, or projects in the pipeline, or future funding opportunities.”— Claire Godfrey, head of policy and campaigns, Bond
The guarantee from the U.K. Department for International Development was intended to encourage NGOs to keep bidding for ECHO contracts despite Brexit uncertainty and to ensure that ECHO did not discriminate against them when awarding contracts.
ECHO is currently in the process of awarding 2019 contracts, but with the Brexit deadline approaching without a deal, NGOs said they are nervous. Many have either stopped or significantly scaled back their ECHO bidding despite the insurance policy. A number of NGOs are looking to relocate their ECHO-funded activities to European offices.
Others said they suspect ECHO is now more likely to award contracts to non-U.K. entities.
“We’ve had too little reassurance from DFID too late. I don’t get the feeling that there’s a lot of commitment there. We also don’t know how ECHO have interpreted [the guarantee], they are keeping their cards close to their chest,” said one NGO worker who spoke to Devex on the condition of anonymity.
Others pointed out that the guarantee still leaves some NGOs unprotected since it only covers contracts signed after August 2018. It also offers no assurances about funding opportunities post-Brexit, and does not apply to funding through the EU’s development arm, DEVCO.
“Whilst assurances ... from DFID are very welcome in the case of a no-deal [Brexit], this does not replace the need for clearly identifiable mechanisms to replace ECHO if we find ourselves shut out in the future,” Lauren Tarrier, humanitarian funding team lead at the Catholic Agency for Overseas Development, told Devex.
DFID wrote to NGOs last week promising to address their concerns. Devex understands it will be holding a roundtable on the issue on Friday, as well as another meeting with NGOs on March 1 to discuss Brexit contingency planning more broadly.
However, Claire Godfrey, head of policy and campaigns at development network Bond — which represents more than 400 U.K. NGOs and aid organizations — said the letter “offers little in terms of reassurance, clarity or information on contingencies.”
“We are just over five weeks away from Brexit and our members still have the uncertainty of a no-deal scenario. This means our members have no idea on the status of their existing contracts with the EU, or projects in the pipeline, or future funding opportunities,” Godfrey said.
As ECHO is still finalizing its grants for 2019, it was unable to provide data about the number of applications from U.K. NGOs it had received, a spokesperson for the European Commission said. DFID confirmed it had received requests from NGOs to underwrite their ECHO contracts but would not say how many.
The U.K.’s exit is likely to leave significant funding gaps, according to a report from Bond. The U.K. has floated the idea of continued collaboration on development post-Brexit through flexible aid instruments that allow non-EU member states to participate. However, the EU appears to be taking a hard line.
U.K. NGOs received another blow to their hopes of securing EU funding post-Brexit, as Swiss NGOs have found themselves suddenly cut off.
Last week, it emerged that ECHO had written to Swiss NGOs informing them they were no longer eligible for funding since Switzerland is not in the EU. Although an EU official who spoke to Devex denied it, commentators fear the Swiss have become collateral damage in the Brexit negotiations.
“ECHO understand it’s playing hardball and that U.K. NGOs will miss out,” one charity staffer said.
Take up of the guarantee
Victoria Wickenden, director of programs at CARE International U.K., which in 2017 won nearly €6 million in ECHO contracts, said the organization recently found out it had won a new €1.5 million contract which they applied for under DFID’s insurance scheme. Wickenden said DFID supplied them with a letter of commitment which they included as part of their application.
“We’ve had too little reassurance from DFID too late.”— Anonymous NGO worker
“We are really pleased that DFID has instigated the insurance policy because otherwise we would have stopped bidding for ECHO contracts,” Wickenden said.
Mercy Corps is a major ECHO recipient, receiving £16 million ($20.9 million) in 2017 and £28 million in 2016, according to Alexandra Angulo, its director of compliance, governance, and risk. The NGO has applied for 10 new ECHO programs with DFID guarantees and is still waiting to hear whether they have been successful, she told Devex.
An official from the European Commission told Devex that U.K. NGOs were required to provide a written statement conveying a “firm commitment” to fund a project should ECHO funding be withdrawn from a third party guarantee, which could be DFID or another guarantor.
While Angulo said that both ECHO and DFID seemed willing to work with NGOs on a funding solution, she said it was unclear how the scheme will work in practice.
“More work is still needed to clarify the administrative process of transferring grants from ECHO to DFID [if the guarantee comes into play] … to make that transition as smooth as possible,” she said.
But even with the guarantee, the persistent uncertainties may have dissuaded some NGOs from applying for ECHO funding. Islamic Relief, which received €1.8 million from ECHO in 2017, has stopped bidding for ECHO contracts.
“For now, the U.K. government has given assurances … We will remain vigilant, however, as amidst the current uncertainties the government’s position may change,” Waseem Ahmad, international programs division director, said in an email to Devex.
There are also concerns about what happens to ongoing ECHO contracts signed before the August date on which the DFID policy kicked in. This is unlikely to affect many projects since ECHO contracts usually run for no more than 12 months.
Christian Aid, however, has a two-year program in Nigeria, agreed before Aug. 23, 2018. The charity could lose up to £500,000 if the U.K. leaves the EU without a deal and ECHO terminates funding, a representative told Devex. If that happens, it will have to finish the program using its own funding or pull out abruptly. The NGO wants DFID to step in and guarantee projects signed before August.
More on Brexit:
“We would like confirmation in writing that, in the event of a no-deal, DFID will cover all existing contracts, including those signed by U.K. [international] NGOs with ECHO prior to the date of DFID’s revised technical notice,” Dominic Brain, head of program development and funding at Christian Aid, said.
When asked by Devex, DFID would only reiterate its commitment to fund bids approved from Aug. 23, 2018. A spokesperson wrote to Devex that, “DFID has agreed to fund U.K. organizations receiving ECHO funding for bids that were approved from 23 August 2018 (the date of our Financial Assurance Technical Notice) until 29 March 2019, for the duration of their implementation from 30 March.”
A number of NGOs said they were hoping to transfer most of their ECHO-funded activities to European affiliates in order to maintain access to the funding. However, ECHO regulations on eligibility are stringent and the details will likely need to be worked out on a case-by-case basis.
For larger INGOs which are part of a network of organizations, such as Oxfam and Save the Children, it could be relatively straightforward for one of their alliance members to take over ECHO contracting. However, this could also mean relocating expertise to a different office.
A spokesperson for Save the Children U.K. said the NGO has “scaled down applications to ECHO as a result of Brexit,” but said that its member offices based in the EU were “stepping up their funding bids.”
“We are planning for a range of possible scenarios alongside the seven other EU-based affiliates, given that the outcome of the Brexit negotiations continues to be uncertain,” an Oxfam GB spokesperson told Devex.
The International Rescue Committee, also a major ECHO grantee, received €61 million in 2017. IRC has offices in Brussels, Berlin, Bonn and Geneva, but currently receives all ECHO funding through its London office. Sophie Scott, IRC’s media manager, said their biggest priority was making sure IRC’s projects could continue without interruption.
However, under ECHO rules, lead NGOs bidding for contracts need to have a framework partnership agreement with the department. For EU affiliates of U.K.-based organizations that do not have separate FPA agreements with ECHO, this will mean applying for a new one in 2020. This comes with strict eligibility criteria including that organizations have their headquarters in an EU member state; and requirements including submitting audited accounts for the last two years.
Update, Feb. 21: This story was updated to clarify IRC’s ECHO funding