The Charity Commission has released its Charity Sector Risk Assessment, highlighting a number of growing financial and governance pressures facing charities across England and Wales.

Drawing on data from annual returns, incident reports and regulatory casework, the report points to a sector under increasing strain.

Key risks identified
Among the most pressing issues are:

• Operating deficits – 22.5% of charities reported spending more than they earned in 2023, up from 20% the year before.
• Rising costs and rising demand – Many charities are dealing with higher service demand while inflation and cost increases continue to erode the value of their income.
• Reliance on reserves – While running a deficit isn’t unusual, long-term reliance on reserves without a plan to rebuild them can weaken financial resilience.
• Damage to public trust – Isolated but serious incidents such as misuse of funds or unauthorised claims for Gift Aid remain a concern due to their potential to undermine sector credibility.
• Wider threats – Trustees are also being reminded to stay alert to risks around governance, safeguarding, fraud, cyber security and external pressures.

Practical guidance for trustees
The Commission is urging boards to take proactive steps in forecasting, risk planning and early intervention. They are also expected to step up awareness around financial stewardship, with a new campaign set to launch this autumn.

For charities facing financial pressures, understanding where the risks are and how to respond, has never been more important. To review the report in full, see here.

If your organisation could benefit from a review of its financial health or risk strategy, our team is here to help. Let’s make sure your charity can continue to deliver on its purpose with confidence. Get in touch.