Charity Sector Risk Assessment 2025

The Charity Commission’s inaugural Charity Sector Risk Assessment has highlighted growing concerns around financial resilience and the ability of charities to deliver public benefit. With over 42% of charities reporting expenditure exceeding income, the sector is facing mounting pressure from rising costs (including an increased taxation burden from changes such as the recent increase in the rate of employers’ National Insurance Contributions (NICs) and increased demand for services. This assessment serves as a call to action for trustees and finance teams to reassess their financial strategies, risk management frameworks and sustainability plans. It also encourages charities to engage more proactively with regulators and funders to ensure long-term viability.

The report also highlights indirect threats to the financial resilience of the sector, such as those stemming from negative public perceptions of the sector arising from fraud cases or other abuses of charitable status. The Charity Commission notes a 23% increase in cases of alleged abuse of charities for private benefit. These instances, whilst representing a minority within an overwhelmingly compliant sector, can have a disproportionate effect on public trust and behaviours such as willingness to donate or otherwise engage with charitable organisations. Use of charities as a money laundering or terror financing vehicle is an ever present concern, as is the potential for override of controls where low numbers of trustees and recruitment issues can lead to a risk of abuse by dominant individuals or those able to exploit a lack of experience and knowledge in areas with complex regulatory frameworks or legislation. Obtaining the right advice is more important than ever, though balancing this with unprecedented cost and demand pressures remains a precarious balancing act.

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If you have any questions, then please feel free to get in touch with Michaela Johns on 023 8046 1256 or email Michaela Johns.