The Charity Commission is to publish its first-ever risk assessment of the sector including a focus on charities’ financial resilience, it has announced.
Amie McWilliam-Reynolds, assistant director, intelligence and tasking at the commission, told an event yesterday that the risk assessment would also highlight the abuse of charitable status for private benefit and “oversight gaps for charities delivering services”.
Speaking at Grant Thornton’s Charity Conference 2025, McWilliam-Reynolds told delegates that 2025-26 will be the first year the regulator publishes a risk assessment of the sector and that it would “support trustees and charity leaders to understand the risk landscape at sector level and support decision-making”.
She said the assessment will enable charities “to look at what you do, review your own risk registers and then consult with us where you need to”.
The publication will include some advice and guidance on how to deal with or effectively manage some of the risks, she said.
Meanwhile, the commission is updating guidance on payments to trustees, which is expected to be published in the next few weeks.
Financial resilience
McWilliam-Reynolds cited three key risks facing the sector, naming financial resilience as a “core risk for all charities” that continues to threaten their sustainability.
“What we have is this perfect storm which is increased costs, falling donation in some areas, concerns around workforce costs, increased demand for services and challenges in securing sustainable public funding,” she said.
She pointed out that the balance between sector income and expenditure has reduced by almost three-quarters since the 2019 annual return (AR), from £2.3bn to £701m in AR 2023.
“That’s really shocking but it shows you why this is our top priority,” she said.
In December 2022, the commission published new annual return questions for charities to complete as part of AR 2023.
On the new topical question around risks, McWilliam-Reynolds said in AR23, “over 40,000 charities indicated negative impacts from increased overheads and expenditure”.
“We know there have also been pressures on income from fundraising, donations, grants and contracts, which is when we talk about sustainable public funding.
“Despite an increase in the overall value of government contracts this year, the average received per charity has fallen.
“The average contract was worth less in 2023 than in 2022 and that’s without thinking about inflation. That’s a concerning picture”.
She added that charity closures and reports of financial difficulties “have remained relatively low”, “going from 98 cases to 184, an 88% increase”.
“This isn’t a massive proportion of our caseload, but it’s increasing. The good thing here is that potentially, this is because charities are very capable of surviving and adapting and that’s something to be proud of.”
Abuse of charities for private benefit
McWilliam-Reynolds named the abuse of charitable status for private benefit as another key risk for the sector.
There is “a small number of charities that are either deliberately targeted or even set up or attempted to be set up through our registration process by bad actors for the purpose of private benefit”, she said.
She said compliance cases based on alleged abuse of charities opened by the regulator have increased by 22%.
Abuse of charities for private benefits includes issues of charity property, unauthorised payments, falsely claiming gift aid and sophisticated methods of tax avoidance or evasion.
McWilliam-Reynolds said this risk “only impacts a very small number of charities but they do tend to have very high income”.
“For us, it’s a high risk because something like that can impact public trust and confidence heavily.”
Finally, she cited “oversight gaps for charities delivering services” as another main risk, noting challenges for organisations that are overseen by multiple regulators including the commission.
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