Whatever the short, medium and longer term outcomes of the UK's Leave/ Brexit vote, charities and the wider third sector will today, next week, next month and next year be working hard to make a difference and create impact in society.

As for all professional and business-focussed organisations, there are legal and related issues that charities should be considering with a potentially changing constitutional landscape.

On that wider landscape, we have the Brodies' EU Referendum hub with more information and comment including an explanation of the legal process required to leave the EU... importantly, the referendum vote itself has not and does not automatically trigger that formal process. Only invoking Article 50 of the Treaty on European Union begins that process and its is unclear at what point that would happen.

For charities here are a few legal and governance points to consider in the meantime:-

  • do you have funding that is directly from the European Union? Or connected to work being carried out in the European Union? Will that funding landscape change or need to diversify?
  • do you work in conjunction with European based organisations?
  • do you carry out projects in Europe?
  • are there any terms within your constitution that are particularly European focussed?
  • the definition of "charitable" for UK tax purposes has a European genesis and therefore may change
  • donations made across European borders may no longer attract charitable tax reliefs; that rule having been brought in under European law
  • there are potential implications for employment law and our employment team has blogged on this
  • do any (funding) contracts have specific EU-related provisions (particularly if they could trigger termination)
  • charities with investments (including foreign currency) will wish to carefully monitor matters with their financial and investment advisers as markets etc react

The continued focus on purposes and governance

Because the legal, diplomatic and practical processes for unwinding the ultimate Brexit settlement will take some time, charities in Scotland should continue to be focussing on strong governance as the bedrock for furthering their purposes and making impact in their chosen area. There are a number of new regulatory issues for charities to consider now irrespective of what happens on Brexit. We summarised some key changes in our May charities e-update.

On legal form, constitutions and governance, the new OSCR Annual Return asks charities to state when they last reviewed their constitution. To help answer that best, we are offering all charities a FREE meeting to look at this very point. Helping charities kick off the new "Targeted Regulation" regime on the right governance foot. 

Watch this space

So, the Leave vote is obviously a big moment. There will be much to happen and it will take time.

As matters develop Brodies will be here to keep you updated through sector specific blogs and updates as well as generally through our Brexit hub - a service coordinated by Scotland's top rated public and constitutional law team and lawyers.