The Charity Commission has recently published the “Charity Sector Risk Assessment,” which outlines some of the serious risks charities in England and Wales are facing.
Drawing on information from annual returns, serious incident reports, and casework, the report highlights various pressures that are impacting many charities.
Key Findings from the Risk Assessment
Some of the main concerns identified include:
- Growing Operating Deficits: According to the 2023 Annual Return, 22.5% of charities reported running a deficit, an increase from 20% in 2022.
- Increasing demands vs costs : Many charities are experiencing increased demand for their services while simultaneously facing higher costs and the erosion of funding value due to inflation.
- Reliance on Reserves: Although running a deficit doesn’t mean a charity is insolvent, many charities are drawing heavily on their reserves to bridge the gap between income and expenditure. Overuse of reserves can quickly reduce their financial safety net.
- Threats to Public Trust: While relatively uncommon, issues such as misuse of charity assets, unauthorised payments, false Gift Aid claims, or charities being established for private gain were flagged as significant due to the damaging effect even isolated incidents can have on public trust.
- Additional Challenges: Governance, safeguarding, fraud, cyber threats, and external factors like geopolitical instability also remain important concerns.
Guidance for Trustees
The Charity Commission offers practical advice for trustees, stressing the importance of thorough forecasting, planning, and prompt action when early warning signs emerge.
A range of resources to support trustees with their financial responsibilities is available, and the Commission plans to raise awareness through a new campaign launching this autumn.
If you need tailored support for your charity, please get in touch – our Not-For-Profit team have decades of experience between them and understand the specific challenges faced by the sector. Speak to our Charities Team
You can read the full report here: https://www.gov.uk/government/publications/charity-sector-risk-assessment-2025/charity-sector-risk-assessment-2025
