Charity sector risk – a roadmap for charities into 2026

Before the ‘Halloween SORP’ and back on 25 September 2025, the Charity Commission published its ‘Charity Sector Risk Assessment’, offering an overview of potential risks to the charity sector.

Drawing on the Commission’s data and insights from sector bodies and experts, it outlines key threats and highlights the current risks impacting charities in England and Wales.

We advise that trustees should review these risks against their own charity’s risk register and threats and ensure proportionate mitigation. 

The report showed a 23% year-on-year increase in The Charity Commission compliance cases, pointing to a rise in the potential abuse of charitable status. The cases range from deliberate misuse, such as multiple registrations for criminal purpose, to governance failures where dominant individuals restrict the oversight and accountability of the full Board of Trustees.

The top risks

Financial resilience

• Rising costs and an increased service demand, has created a financial squeeze
• 22.5% of charities reported operating deficits in 2023.
• There is a greater reliance on reserves, which is threatening sustainability.

Trustees should plan ahead, monitor accurate and robust forecasts, and explore efficiencies such as potential collaboration, shared services or even mergers if needed.

Public benefit and integrity 

The second risk relates to charities delivering their public benefit. The misuse of charity assets for private gain has increased, with compliance cases up 23% (e.g., false Gift Aid claims, tax evasion and governance weakness). Though rarer, these cases damage trust and reputation.

Trustees should review and strengthen financial controls, review transactions, manage conflicts of interest, and follow Charity Commission guidance to safeguard assets and support compliamnce.

What are the other significant ongoing threats facing the charity sector?

The Commission identifies significant and ongoing threats of regulatory interest:

• Governance risks: Charities are struggling to recruit enough trustees to ensure effective oversight leading to poor board oversight and decision-making.
• Safeguarding: Protecting vulnerable beneficiaries remains critical. Risks include online targeting, and Trustees are encouraged to plan for such scenarios in line with the social media policy and guidance.
• Fraud and cybercrime: Increased exposure to financial crime and data breaches, which can increase when resources are stretched, particularly for small charities.
• Technology risks: AI misuse, cyber threats and other digital vulnerabilities offer opportunities and challenges, with charities cautious about tech decisions due to the legal and ethical risk. 
• Social and geopolitical tensions: Polarisation, mis/disinformation and heightened community tensions in the UK are a risk. Overseas operational risks affecting those charities directly in conflict zones.

This all being said, the findings of the report are that public trust remains strong (around 60%) and charities have shown resilience but must adapt to these ongoing economic pressures.

We work with over 700 charities and assist them in strengthening governance and plan for financial and other sustainability. If you would like to discuss this, please do get in touch with our expert charity team.