Brexit: Impact on Charities, Social Enterprises and Not-For-Profit Organisations

Wed, 28 Sep 2016 09:00 AM
Author: Allen & Overy and Thomson Reuters Foundation
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On 23 June 2016, the United Kingdom voted to leave the European Union. It is difficult to predict how or when the formal exit will actually occur and what legal and constitutional arrangements will be agreed between the UK and the EU. What is clear however is that Brexit, whatever its ultimate form, will have an impact on the legal rights and obligations of charities, social enterprises and not-for-profit organizations (NPOs), as well as on their ability to perform their operations and to sustain themselves both in the UK and internationally.

From an economic point of view, the uncertainty following the “leave” vote will have significant repercussions on NPOs in the short term, and possible long-term consequences as well. It is therefore important for NPOs to be fully geared up to face the challenges ahead. Although some areas of the law will remain unchanged, NPOs will need to be mindful of the impact that Brexit may have in particular on employment law, data protection and other areas that are of importance to the operation of not-for-profit entities.

EU law continues to apply until the UK formally exits from the EU. The key unknown at this stage is which post-Brexit model will be negotiated. From a legal perspective, for the moment it will be “business as usual”, however market volatility resulting from the vote may trigger consequences, for instance under the terms of existing contracts. For NPOs, uncertainty in relation to Government and EU funding, as well as the potential contraction of donations linked to a decline in the status of the City of London, will be a major challenge. Organisations and their advisers undoubtedly will need assistance analysing the immediate fallout from the Brexit vote. The law as it currently stands may not always go hand in hand with what politics requires.

This Brexit Note provides an overview of some of the legal implications of Brexit. It deals with the potential impact of Brexit on issues including: employment and workers’ rights, EU funding and finance, contractual terms, insurance, data protection, intellectual property, competition, trade, public procurement, tax, environment and human rights.

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