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May 31, 2019 | Media Coverage

More than £1.3bn of donations could be affected by a no-deal Brexit, Western Union warns

Alex Lawson, head of hedging at Western Union, looks at how volatility in the value of the pound after a no-deal Brexit could make it significantly more expensive to run overseas charitable projects

Charities must do more to prepare for a no-deal Brexit and £1.3bn of donations could be at risk from fluctuations in the value of the pound, according to the finance firm Western Union.

Western Union told Third Sector that, although some charities were "hedging" to manage their currency risks in the face of a possible no-deal Brexit, many charities were not doing so.

Volatility in the pound has increased recently, in particular with the next Prime Minister likely to be more receptive to a no-deal Brexit. Western Union estimates that £1 in every £8 donated in the UK could be affected because it is spent on projects and programmes abroad.

A crash in the value of the pound could mean that it becomes significantly more expensive to buy goods and services in foreign countries.

Alex Lawson, head of hedging at Western Union, said that many charities had not woken up to the potential impact of a no-deal Brexit, and were instead holding off from action until they knew what was happening.

"The idea of hedging is that we don’t know what is going to happen and you want to protect yourself against an outcome that is negative for the pound, assuming you have pound donations and are sending them overseas," Lawson told Third Sector.

"Once it becomes clear what is going to happen, the markets will have reacted, the pound will already have fallen and it is too late."

Read the entire article at Third Sector.