Charity risk landscape: A 2025/26 perspective on charity sector challenges

The report shows a 23% year-on-year increase in compliance cases, pointing to a rise in abuse of charitable status. Incidents range from deliberate misuse, such as multiple registrations for criminal purpose, to governance failures where dominant individuals restrict oversight and accountability. In response, trustees are urged to strengthen financial controls, manage conflicts of interest, and follow Commission guidance to safeguard assets.

Financial resilience

• Charities face a financial squeeze as income–expenditure gaps narrow and in-year deficits rise, with many drawing on reserves.
• Pressures include higher workforce costs (+23% since 2019), static public funding per contract despite inflation, and growing demand for services (9% of the public received support in 2023 vs 3% five years ago).
• Trustees should plan ahead, monitor forecasts, and explore efficiencies such as collaboration or shared services

Risks to public benefit

• Abuse of charitable status is rising, with compliance cases up 23% (390 to 479 year-on-year).
• Risks include deliberate misuse (e.g., multiple registrations for criminal gain), dominant individuals limiting oversight, and a lack of governance knowledge.
• Trustees should strengthen financial controls, review transactions, manage conflicts, and follow Commission guidance to safeguard assets and support compliance.

What are the significant ongoing threats facing the charity sector?

The Commission identifies eight significant and ongoing threats of regulatory interest:

When charity risks become real

Recent media coverage paints a vivid picture of these risks in action:

• Governance failures: One charitable foundation faced scrutiny over governance lapses, while a seven-year investigation revealed serious safeguarding issues at monastic charities.
• Financial mismanagement: Recently, one charity wrote off £8 million for a software project that was never launched.
• Redundancies and restructures: 500 full-time posts have been cut by one heritage charity, and another proposed 250 redundancies, pointing to clear signs of financial strain. There have been others that have also reported significant workforce reductions.
• Geopolitical influence: MPs have warned of unchecked foreign repression targeting UK-based charities, and Trump’s foreign aid pause is expected to impact UK funding streams.
• Misinformation risks: One humanitarian organisation faced reputational damage over alleged forced evacuations in Ukraine, with misinformation hampering aid efforts.