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Charity sector risk assessment
A report from the Charity Commission identifies key risks charities need to protect themselves from in an ever-changing world
RISK
GOVERNANCE
Sarah Loader
Consultant, Campbell Tickell
Sarah Loader
Consultant, Campbell Tickell
Issue 81 | December 2025
We are living in an ever-changing world. There are shocks and shifts in society, the economy and geopolitics on what seems like a daily basis. Throughout, charities have had to absorb and deal with these changes, while still providing vital services.
Risk is an inevitable and sometimes welcome fact of life. Things would be boring if we didn’t take a risk or two. And charities have thrived on taking (calculated) risks and responding to a changing world to push boundaries, finding opportunities to do things better and improve society for everyone. No one can just stand still or do the same things in the same way forever.
But charities and their boards have a duty to protect people, funds, and the organisation’s reputation, so they need a keen awareness of risk and to incorporate ways to mitigate the harms that might arise.
Key risks
The Charity Commission, as the regulator of more than 170,000 registered charities in England and Wales, has unique insight into the risks charities are facing and has analysed data it collects to publish its first ever Charity Sector Risk Assessment.
Using its access to thousands of sets of accounts and annual returns, insights from investigating hundreds of compliance concerns, data from contacts via their services to report concerns and wider sector intelligence, they have identified several key risks, including:
- Financial resilience: Rising costs, increased demand and shrinking public funding are forcing many charities to dip into reserves. Figures show the gap between income and expenditure in the sector has narrowed and that 43% of charities reported that their income exceeded expenditure.
- Risks to public benefit: A rise – albeit not huge in numbers – of individuals misusing charitable structures for personal gain, including tax evasion and property misuse.
- Governance challenges: Including around trustee recruitment, federated structure disputes and local authority management of community assets.
- Safeguarding risks: Online targeting of charity workers and the potential for tech-enabled harm are emerging concerns, flagged by sector stakeholders.
- Fraud and cyber threats: Thankfully, while not yet widespread in Commission casework, these risks are increasingly cited by charities themselves.
- Social tensions: At a time of polarised views and debates, charities have become targets of criticism and in some cases, charities themselves have engaged in inappropriate social media communications. This is a risk to public trust in the sector.
- Charities operating overseas: Safeguarding and financial stability are under pressure in overseas contexts.
- Hostile foreign states: A new and serious risk – charities being co-opted to promote external ideologies.
The future role of the board
What does this mean for charities and their boards? Trustees have a duty to act responsibly, reasonably and honestly and to exercise sound judgement. The revised Charity Governance Code, launched this autumn, places a strong emphasis (through a new principle) on boards managing resources and risks, and sets out the behaviours and types of processes that might support them in doing so.
The Charity Commission’s Charity Sector Risk Assessment is a timely reminder of the complexity charities must navigate. The charity sector is incredibly diverse, and different charities will need a different and proportionate response to these risks.
Charity trustees can use this assessment as part of regular board conversations about risk and its impact on their charity, helping to understand the wider risk context and what implications there are for their own organisation and their own approach to risk. Core to a board’s confidence in its approach to risk management will be the robustness of its mitigations or controls and both the sources and levels of assurance that it has regarding those controls.
Overall, it is a call to action for all boards and leaders to strengthen their governance and decision-making, safeguard public trust and plan for long-term resilience.
“Core to a board’s confidence in its approach to risk management will be the robustness of its mitigations or controls and both the sources and levels of assurance that it has regarding those controls.”
