NGOs raise concerns around exchange rate volatility

The majority of UK based NGOs fear falling into ‘financial difficulty’ due to currency market volatility, a report has warned.

A report into foreign exchange rates and NGOs has found widespread concern about the impact of volatility in international currency markets on their financial situation.

The report found that more than half (55%) of 114 charities surveyed said foreign exchange rate volatility was a “major challenge”.

More than six out of ten (63%) warn that exchange rate movement of up to 10% would cause them “financial difficulty”.

Currently four out of ten (43%) charities are absorbing negative movements in exchange rates through unrestricted funding.

Many are unprepared for market volatility, warns the report by Charitytransfers.org, with 71% of charities saying they have no official foreign exchange policy. Lack of internal resources, insufficient knowledge and lack of priotisation are cited as factors.

NGOs' currency exchange fears have been revealed as the international aid sector tackles government cuts to funding.

Experience has taught us that charities can save up to 50% per year if they get their FX function set up right,” said Charitytransfers.org.uk head of CSR Curtis Noble.

“With funding cuts to the charity sector, every INGO should sit up and take note of the findings of this report to understand where improvements can be made to this critical area of their finance function.”

Charitytransfers.org is the social division of risk management consultancy Audere Solutions.

Its INGO FX Insights Report has been co-published with tax advisers Crowe.com.

“As demonstrated through the results of the survey, many lack the resources and expertise to develop their own FX policy and those that do are often overtaken by higher priority tasks,” said Crowe UK national head of social purpose and non-profit organisations, Naziar Hashemi.

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