Does Brexit Impact your Nonprofit? - Changing Our World
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By Dr. Susan RaymondBrexit

Britain will leave the European Union. This has already cost one job, Prime Minister Cameron’s.  But what does this mean for the American nonprofit sector?  What should you expect?

I would make five points.

1. Expect near term volatility. During the vote the Asian markets swung from being off 300 points to being up 10 points, depending on even a 0.3 percentage point swing in the in/out voting ratio. This morning, the Sterling immediately plunged to a 31 year low, with a 10% decline in just 6 hours.  The Dow was off 500 points in the first hour of trading.  Nonprofit asset bases will follow suit.  We are not talking about Great Recession levels of loss here, and not over long periods of time, but the implications of the “out” vote will take time to be absorbed and nonprofits should expect market anxiety for at least the next several weeks.  Do not panic; do not be surprised; stay your program course.

2. Recognize that this is not going away. The process for leaving the European Union is part of the treaty agreement.  The treaty for the European Monetary Union is permanent – countries who gave up their own currencies did so permanently (at least until Greece decides otherwise, that is).  Britain did not join the Monetary Union, only the political union.  So, there is a departure process.  It will take time – perhaps a year or more – for that departure process to work its way through the system.  The lawyers will have a field day (Note to Self: Think about adding a trans-Atlantic corporate lawyer to the Board), but the process of unwinding from the EU will make today’s acute burst of pain into a chronic ache.  Expect economic uncertainty in Britain and Europe (and therefore in a globally-tied U.S. economy) for the next year.  Be very aware of economic effects on your constituency and your donors.

3. Expect a domino effect. Scotland voted “in.”  Last night’s results will reopen Scotland’s drive for separation.  The political effect will also spread and undergird debates over national policy, not least in the United States.  The people spoke in Britain, as they have a wont to do in open democracies.  Expect even deeper divisiveness, which may divert the time and attention – and perhaps even resources – of your donors.  Your case and the clear and compelling evidence of performance and impact of programs needs to be kept front and center.  Make no assumptions about the line of sight of your supporters.

4. For those nonprofits with international programs or European or British donors, stay close to your leading individuals. Ignore what or how much they support you in the next year; keep them close.  No one died last night because of the vote.  Reach out to them; understand them; keep them close. 

5. Recognize that no organization – for-profit or nonprofit – can any longer afford to be apart from the economy. Yes, you are mission-driven.  But the fuel in your tank comes from the global economy.  You may not like economics.  You may not find the Business Section or the Financial Times to be riveting reading.  Pour yourself another cup of coffee and read.   Toward the end of the Great Recession, Changing Our World counseled nonprofits to understand that, while that recession was extraordinary in its depth, it was not extraordinary in its occurrence.  Deep and irreversible global integration of the economy meant that a sniffle in Beijing would lead to a sneeze in Birmingham.  We encouraged nonprofits to create a set of economic indicator levels, which would immediately trigger a Board subcommittee to oversee a set of revenue and fundraising actions to ensure financial stability.  This is not the Great Recession, but it is a shock to a global economy whose recovery from that recession has not been robust almost anywhere.  Including the United States.  If you created those indicators, use them now.  If you did not, do it now.