Small charities and financial vulnerability

Small charities play a critical role in supporting financially vulnerable people and communities, yet they face disproportionate financial challenges. Recent reports show that many are operating at a deficit and relying heavily on reserves. This raises concerns about long-term sustainability and service continuity. Research by Lloyds Banking Group, in conjunction with its charitable partners, finds that (unsurprisingly) the vast majority of charities cited additional funding as a key requirement to help them enhance financial wellbeing support services. However, funding was not the only requirement; a majority of charities surveyed also identified training for staff and volunteers, enhanced partnerships with private sector organisations and stronger referral networks with peers as key requirements.

Funders and policymakers are urged to consider targeted support for small charities, including simplified reporting requirements and access to emergency funding. For accountants and auditors, this trend underscores the importance of robust financial oversight and tailored advisory services to help small charities navigate economic uncertainty.

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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.