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The “Charity Sector Risk Assessment” recently published by the Charity Commission identifies some of the serious risks being faced by charities in England and Wales.
The report draws on data from annual returns, serious incident reports and casework. It notes several pressures that are making it harder for many charities to do their work.
What the risk assessment found
Some of the headline issues include:
- Rising operating deficits: In the 2023 Annual Return, 22.5% of charities reported a deficit (i.e. spending more than they bring in), up from 20% in 2022.
- Increasing demands vs costs: Many charities are seeing more demand for their services, while costs are rising and inflation is eating away at the value of their funding.
- Use of reserves: Having a deficit doesn’t mean a charity is insolvent. However, many charities are relying on their reserves to cover the gap between income and expenditure. Overuse of reserves can quickly leave little safety net.
- Risks to public trust: Though relatively rare, misuse of charity property, unauthorised payments, false claims for Gift Aid, or setting up charities for private benefit were flagged as significant because of the damaging effect even isolated incidents can have on public trust.
- Other concerns: Governance, safeguarding, fraud, cyber threats, and external pressures such as geopolitical instability are also in the mix.
What should trustees do?
The Charity Commission have included some guidance for trustees in the report. The importance of careful forecasting and planning and being able to respond quickly to any early warning signs, are emphasised.
The Charity Commission has a range of guidance to help trustees fulfil their responsibilities around financial stewardship, and it is planned to promote these further in a new awareness campaign this autumn.
If you would like personalised assistance with your charity, please get in touch. We would be happy to help you!
The full report can be read here: https://www.gov.uk/government/publications/charity-sector-risk-assessment-2025/charity-sector-risk-assessment-2025
The information provided in this blog is for general informational purposes only and should not be considered professional advice. As far as we are aware, the content is accurate at time of publication. Torgersens assumes no responsibility for errors or omissions in the content or for any actions taken based on the information provided.
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