Charities could face a "double whammy" of financial losses after the UK voted to leave the European Union, a voluntary sector academic has warned.
Paul Palmer, professor of voluntary sector management and associate dean for ethics, sustainability and engagement at Cass Business School, said that after yesterday’s referendum, in which 52 per cent of the public voted to leave the EU, charities could face further cuts in government funding.
He said there was also a risk that falling income from donors, increased demand on charitable services and less money brought in from legacies could further exacerbate charities’ funding worries.
"It is possible the sector will experience a ‘double whammy’ of financial losses, particularly if government funding has to be further reduced and donations from the public fall as donors feel less wealthy," said Palmer. "And, if house prices fall, this is likely to have an impact on legacies.
"The need for organisations to understand their financial strategies and funding mixes will become ever more critical.
"On the other side of the coin, we are also likely to see an increase in demand for charity services, particularly if unemployment and mental stress rise in the short term."
Palmer said that the international development charities could be most at risk of the adverse financial implications of the EU referendum, especially if further government austerity was to lead to cuts to the international aid budget.
But he said that charities that had properly diversified their portfolios and talked to good investment managers should remain calm and "do nothing".
He said that although the stock markets had suffered today, historical indicators showed that markets usually rallied.