The impact of USAID cuts on UK charities

There is no good news for charities coming out of the United States at present. From funding cuts domestically and overseas, to threatened litigation and withdrawal of tax exemptions, the picture is bleak. The major issue impacting charities in the UK is the freeze on USAID. UK charities might be in direct receipt of USAID, or they might be working on projects with partners, or on projects involving USAID.

If you are impacted, either directly or one of your partners is impacted, what is the best course of action to minimise risk and damage to your charity? How do you act in your charity’s best interests in such extreme circumstances?

Practical steps

But here, in the UK, what should charities be thinking about?

1. Disaster management. How best to pause programmes, taking into account maintaining future capacity, possibility of failure to recoup costs and the community you serve.
2. Consider seeking advice on employment law (which will vary country to country) on any suspension of programmes.
3. The contractual and governance position: how will liability for sub-contracts and grants, and projects with partners or other stakeholders be apportioned?
4. ‘Significant financial loss’ is a cause to make a serious incident report to the Charity Commission.
5. If you wish to lobby or campaign on this issue, bear in mind the Charity Commission’s guide to campaigning and political activity, as well as its social media guidance.  
6. Bear this event in mind in the future – onwards grants should have enough flexibility in them to protect your charity should funding dry up again. How can you maximise your funding diversity to minimise risk to your charity’s operations?
7. Keep in mind the insolvency rules and seek advice if necessary – where the USAID is a significant source of funding, these may come into play.

We are able to help with all of these matters. We are already advising a range of UK and international charities on the fallout of the US government’s actions. We are keeping up to date with developments from a range of contacts with feet on the ground. Please get in touch with Neil Burton [email protected] if we can help in any way.