Charity Sector Risk Assessment 2026: what trustees need to know

The Charity Commission has published its Charity Sector Risk Assessment 2026, highlighting the key issues trustees and charity leaders should consider when reviewing their own organisations’ risks. 

This is the Commission’s second annual assessment and, while the charity sector is praised for its resilience and continued delivery of “extraordinary outcomes”, the report identifies a number of economic, governance and social challenges that could affect charities’ ability to deliver their purposes. 

Every charity is different and not all of the risks identified will apply to every organisation. However, the Commission is encouraging trustees to consider the issues raised as they review and stress-test their own risk registers. 

Financial resilience

Financial pressure continues to be one of the biggest risks facing the sector. 

There is some positive news, with a 13% increase over the last three years in the number of charities receiving government contracts. Larger charities, with incomes above £500,000, are however more likely to receive both government contracts and grants. 

Across the sector as a whole, income continues to exceed expenditure, but the picture is far from uniform. In 2024, around 41% of charities had expenditure exceeding income, with smaller charities continuing to operate on particularly narrow margins. 

The Commission has also seen a 27.7% increase in casework relating to insolvency and financial difficulties, albeit from a relatively small base – 235 cases compared with 184 out of more than 170,000 registered charities. Voluntary removals from the register also increased by 36%, although charities may cease operating for a variety of reasons. 

Changes in donor behaviour add further uncertainty. Evidence suggests fewer people are making larger donations and that reduced disposable income is contributing to more one-off rather than sustained giving, making future income harder to predict. 

Trustees are encouraged to ensure their financial reporting is regular and fit for purpose, to review forecasts frequently and, importantly, to recognise and act on early warning indicators while they still have a range of options available to them. 

Risks to public benefit – individuals

Charities must operate for public benefit rather than for the private benefit of individuals associated with them. 

While cases remain relatively small in number, the Commission has seen a sustained increase in concerns about charitable status being abused for private benefit. Cases increased by 38% in 2024-25 and by a further 29% in 2025-26. 

Trustees should ensure that financial controls remain fit for purpose, with appropriate checks and balances over access to funds and assets. Financial and asset transactions should be reviewed regularly, and particular care should be taken over payments to trustees and conflicts of interest. As a reminder, the Charity Commission published detailed guidance for trustees on this subject earlier this year. 

Risks to public benefit – structural vulnerabilities

Many charities operate in areas that are regulated not only by the Charity Commission but also by other organisations, such as Ofsted or the Care Quality Commission. 

The Commission has seen an increase in complex multi-agency casework, sometimes involving allegations of significant fraud and cybercrime. During 2025-26 it made almost 500 disclosures of information to organisations including the police, local authorities and HMRC. 

It highlights particular vulnerabilities in areas including social housing, care services and out-of-school settings. 

Trustees should therefore understand all of the regulatory requirements applying to the services their charity provides, follow relevant sector best practice and undertake appropriate due diligence before entering into new service-delivery agreements. 

The report also highlights new responsibilities for larger charities arising from measures under the Economic Crime and Corporate Transparency Act 2023 in relation to fraud risk. 

Governance risks

There is some encouraging news on governance, with a 32% fall in cases concerning trustee decision-making or breaches of Charity Commission guidance. 

However, cases involving disputes within charities increased by 57%, from 579 to 909. These can involve issues such as trustee elections, financial transparency and land or property. 

The Commission suggests that some of this increase may be linked to the difficult decisions trustees are having to make in response to financial pressures and wider social tensions. Some charities are also finding it increasingly difficult to recruit sufficient trustees, potentially affecting the ability of boards to provide effective governance. 

Safeguarding risks

Around one quarter of concerns raised with the Commission in recent years relate to safeguarding. 

Trustees should remember that their safeguarding responsibilities extend beyond beneficiaries and include volunteers and employees. 

The Commission particularly highlights the risks associated with individuals abusing positions of power, influence or trust within a charity, and the need for trustees and charity leaders to handle allegations involving such individuals carefully. 

Social tensions

The Commission recognises that some charities are operating in an increasingly hostile environment, particularly those working in areas that attract strong public or political views. 

Organisations supporting refugees and asylum seekers, young people and homeless people, as well as places of worship, are among those that have faced hostility. 

Security threats, religious and racial intolerance, legal uncertainty and online misinformation or disinformation can all divert time and resources away from delivering charitable objectives. 

Overseas operations, technology and cyber risk

Charities operating overseas can face additional risks, particularly those working in conflict zones or politically unstable regions. These can include safeguarding concerns, risks associated with transferring money overseas and exposure to changing geopolitical circumstances. 

Technology also presents both opportunities and risks. The Commission reports that 30% of charities experienced a cyberattack during the past year, with phishing the most common and disruptive form of attack. 

Artificial intelligence can help charities improve efficiency, accessibility and impact, but trustees remain responsible for ensuring appropriate safeguards, oversight and risk management are in place. 

What should charity trustees and leadership teams do now?

The Commission’s report provides a useful opportunity for trustees and leadership teams to review and stress-test their own risk registers. Not every risk identified will apply to every charity, but boards should consider whether the risks relevant to their organisation are properly understood, regularly reviewed and supported by appropriate controls. 

Financial resilience in particular remains a significant concern. Trustees should have access to timely and meaningful financial information, regularly review forecasts and cash flow, and identify early warning signs that might require action. Financial controls should also be reviewed regularly to ensure they remain appropriate as the charity and the risks it faces evolve. 

Kreston Reeves works with charities of all sizes, helping trustees and leadership teams strengthen their financial governance and resilience. Our specialist charities team can support organisations with audit and assurance, financial reporting and forecasting, internal financial controls, risk management and wider strategic and financial advice. 

Seeking advice early, before financial or governance concerns become more difficult to address, can give trustees more options and help protect the charity, its assets and the people it supports. 

If you would like to discuss the implications of the Charity Sector Risk Assessment 2026 for your organisation, please speak to our charities team.