In September 2025, the Charity Commission published its first annual Charity Sector Risk Assessment. The report is designed to help trustees and charity leaders understand the current and emerging risk landscape and make informed decisions.
Key findings
The report identifies two spotlight risks and a range of other threats:
Financial resilience
Charities face growing financial pressures, including rising costs, increased demand for services, and inflation eroding funding value. The proportion of charities reporting operating deficits has risen, with many drawing on reserves to bridge gaps. This trend highlights the need for robust financial planning and stress testing.
Risks to public benefit
The Commission warns of misuse of charitable status by bad actors seeking private gain. Examples include false Gift Aid claims, unauthorised payments, and tax avoidance schemes. While cases are rare, even isolated incidents can damage public trust significantly.
Other risks highlighted in the report include:
- Governance risks: Weak governance structures can lead to poor decision-making and compliance failures.
- Safeguarding risks: Charities must maintain strong safeguarding practices to protect vulnerable beneficiaries.
- Fraud and financial crime: Persistent threats include cyber-enabled fraud and insider abuse.
- Emerging technology and cyber risks: Increased reliance on digital tools exposes charities to cyberattacks and data breaches.
- Social tensions and geopolitical turbulence: Charities operating in sensitive environments face heightened risks from political instability and hostile foreign states.
PEM’s view
The Charity Commission’s risk assessment provides a valuable overview of systemic risks and practical insights for trustees. It encourages charities to review their risk registers, strengthen governance, and embed resilience measures. By understanding these risks, charities can better protect public trust and ensure continuity of services. We recommend all charities read the full report and reflect on its findings.
Please note that this content is not intended to give specific technical advice. It is designed to highlight some of the key changes rather than provide an exhaustive explanation of the topics. Professional advice should always be sought before action is either taken or refrained from as a result of information contained herein.
