New analysis highlights key risk areas for charities

The Charity Commission for England and Wales has published another analysis of various data it collects about charities, in an effort to discern current and emerging risks for charities. This relatively short document is based on data from charity Annual Returns and accounts, compliance investigations, serious incident reports (RSIs), and self-reported concerns from charities.  

As such, the analysis forms a valuable insight for charity boards which aggregates many different data points into a few summarised risk areas for trustees to consider, together with signposting to relevant guidance and help related to each risk area. 

The available data covers data from 2024 and 2025, so to some extent these risks may have heightened or lessened in the intervening period. Nevertheless, they’re all recognisable in the current environment.  

If your board or leadership team is doing a risk assessment as part of an annual governance review or preparing official paperwork, this document would be a useful starting point to inform those exercises. Doing so would likely also represent good practice.  

The document summaries seven risk areas, with the first three presented as ‘key risks’. In this edition of the report, these are: 

Risk – financial resilience

It’s no surprise to see that financial risk figures high in the assessment again in this edition. Although the Commission finds that recently overall charity income is exceeding expenditure compared to the years immediately after the pandemic (2022 and 2023), there remain worrying signs. For example, “around 2 in 5 charities (41%) had expenditure that exceeded income, with the remainder breaking even”. Further, “the margin between income and expenditure across the sector improved but has not yet recovered to pre-pandemic levels, with smaller charities operating on the narrowest margins.” 

Risk – public benefit and individuals

(i.e. Risks of individuals perpetrating fraud and abuse of charity status)

This can include charities being “deliberately targeted by bad actors seeking private benefit – and in some cases, attempts are even made to intentionally set up a charity for this purpose”. For example, ‘bad actors’ are increasingly using artificial intelligence to try and register bogus charities, and the Commission is having to spend much more resource investigating and denying these registrations. This is linked to other increased risks around cybersecurity and AI. 

Risk – public benefit and structural vulnerabilities

(i.e. Overlaps with other regulators and risks associated with gaps or confusion surrounding these)

The report specifically mentions social housing, care, and out of school education as areas of charitable provision where the existence of other regulators of charities with a different focus can cause confusion and provide “opportunity for abuse by those with malign intent”. Charities working in those areas face a more complicated regulatory picture and should remember that their specialist regulator may not be alert to all the issues associated with being a charity. 

The analysis highlights a number of other risks, including around governance (specifically a sharp increase in risks arising from trustee disputes), safeguarding (especially related to people in positions of power or influence) social tensions (including security threats and effects of mis/disinformation), overseas operations (tensions in the Middle East), influence of hostile foreign states, and emerging tech and cyber security (phishing and ransomware attacks). 

It’s really worth reviewing these risk areas the next time your board meets, especially if you’re scheduled to do an annual risk assessment or starting to prepare the trustees’ annual report. The analysis from the Charity Commission includes helpful links to relevant guidance for each of the risk areas, and it’s a good idea to check through these and see if trustees need to brush up on any specific areas of guidance. 

Our Charity Governance Tools and Templates could also help with that practical follow-up work. The resource includes more than 80 adaptable templates, checklists, prompts and guidance covering areas such as trustee recruitment, board meetings, managing risk, reporting duties, policies and compliance, EDI, strategy, impact, solvency and financial sustainability. Used alongside the Commission’s analysis, it can help boards turn a broad review of risk into concrete actions, clearer records and stronger governance processes.