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In its first ever annual Charity Sector Risk Assessment, the Charity Commission has identified financial resilience as among the serious risks facing charities. According to the report, the sector is experiencing a multitude of challenges, including the effect of inflation on funds, rising costs of employing staff and an increase in demand for charitable services.
The regulator notes that although these pressures affect charities in different ways, 22% of charities reported a deficit in their 2023 Annual Return, an increase from 20% in 2022. The Commission states this is continuing a growing trend of charities dipping into reserve funds to 'bridge the gap' between income and expenditure.
This echoes the Commission's research published in July 2025 demonstrating that in the last year, 9% of people received food, medical or financial support from charities, three times as much as the figure 5 years ago.
The report sets out key steps trustees can take to mitigate the risks around financial resilience including careful forecasting and spotting (and responding to) early warning signs.
The Commission has launched a new awareness campaign aimed at highlighting its array of financial guidance for charities.
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