What the Charity Commission is worried about in 2026: a finance reading

Charity board members reviewing financial risk figures from the Charity Commission's 2026 risk assessment

On 18 August 2026 the Charity Commission published its Charity Sector Risk Assessment 2026. It received little coverage. For trustees and treasurers, it is one of the most useful documents the regulator has produced this year.

The assessment covers charities in England and Wales. Its financial analysis is based on annual returns for financial years ending in 2024, the latest data available. Its casework figures cover periods up to 2025-26.

Most summaries will read it as a governance document. This article reads it as a finance director would, and picks out the figures that should change what a board looks at.

Two in five charities spent more than they received

The Commission’s analysis found that 57% of charities had more income than expenditure. Around 41% had expenditure that exceeded their income. The rest broke even (Charity Commission, 2026).

At sector level the picture looks stable. Charities received £102 billion and spent £100 billion in 2024, a margin of about £1 billion, up from a five-year low of £700 million in 2023. The Commission says this is the third year in a row its analysis has shown “the ongoing financial squeeze in parts of the sector”, with smaller charities operating on the narrowest margins.

The finance reading. A sector surplus of £1 billion on £100 billion of spending is a margin of about 1%. That total is spread unevenly, and it tells an individual charity nothing about its own position. A single deficit year is not a crisis if it was planned and funded from reserves. A run of unplanned deficits is. Your board should be able to tell the two apart from the management accounts it already receives.

Financial difficulty cases are up by more than a quarter

Between October 2024 and September 2025, the Commission saw a 27.7% rise in casework about insolvency and financial difficulties. That was 235 cases, up from 184.

The Commission is clear that this is a very small proportion of the more than 170,000 charities on its register. The direction of travel matters more than the number.

In a similar period, voluntary removals from the register rose by 36%, from 688 in 2023/24 to 938 in 2024/25. These are charities that told the Commission they were no longer operating. The Commission notes the reasons vary, but include concerns about whether the charity was a going concern.

The finance reading. Both figures only count charities that reached the regulator. Financial difficulty usually builds over several reporting periods before it becomes a case. The warning signs tend to be visible much earlier, in cash flow forecasts, in the gap between restricted and unrestricted funds, and in how many months of costs the charity’s free reserves would cover.

Disputes inside charities rose by 57%

Cases involving disputes within a charity rose from 579 to 909 in 2024-25. The Commission says these can involve trustee elections, financial transparency, and land or property.

It also says the increase “may be partly due to difficult decisions that charities are having to take in response to financial pressures”.

The finance reading. Financial transparency is named as one of the causes. Disputes about money are more likely when trustees, staff or members do not have clear, regular information about the charity’s position. Good financial reporting will not prevent every disagreement, but it removes one of the most common reasons for them.

Government contracts carry more of the load

The Commission reports a 13% increase over three years in the number of charities awarded government contracts. In 2024, those contracts had a combined value of almost £10.96 billion. Government grants totalled £6.75 billion, and grants from trusts and foundations £12.23 billion.

The assessment also points to “increased delivery expectations within fixed budgets and pressures which preclude full cost recovery”.

The finance reading. A contract that does not cover its full cost, including a fair share of overheads, is funded in part by the charity’s unrestricted income. That can be a deliberate choice. It should never be an accident. Before bidding, know what the service will really cost to run, and what happens to your reserves if the contract value does not rise with your costs.

The Commission’s own advice is to “undertake due diligence before entering new service delivery agreements”.

Money leaving the charity for the wrong reasons

Cases about private benefit and misuse of charity funds rose by 38% in 2024-25, from 211 to 291, and rose again to 374 in 2025-26. The Commission also reports an increase in complex casework, “sometimes involving allegations of significant fraud”.

The assessment also reports that 30% of charities experienced a cyber attack in the past year, with phishing the most common.

The finance reading. Most of the controls that prevent misuse are simple and cost little. They fail when they depend on one person, or when nobody checks the checks.

What the Commission expects of trustees

The assessment is specific about what it wants boards to do. On financial resilience, it asks trustees to:

On protecting charity funds, it asks trustees to:

The Commission says it “will be robust in using our powers” and “will support trustees who make decisions in good faith”.

Five checks for your next board meeting

  1. Budget. Next year’s budget matches forecast income to operating costs, line by line.
  2. Forecast against actual. The board compares results with the forecast at every meeting, and someone is responsible for acting on the difference.
  3. Reserves cover. The board knows how many months of running costs its free reserves would cover today.
  4. Contract pricing. Every contract held, or planned, covers its full cost, including overheads.
  5. Payment controls. No single person can move money out of the charity’s accounts without a second person seeing it.

If the board cannot confirm any of these from the information it already receives, that is the first thing to fix.

Frequently asked questions

What is the Charity Sector Risk Assessment 2026?

It is the Charity Commission’s annual assessment of the main risks facing charities in England and Wales. The 2026 edition was published on 18 August 2026.

What are the main risks in the 2026 assessment?

The spotlight risks are financial resilience, risks to public benefit from individuals, and risks from structural vulnerabilities. It also covers governance, safeguarding, social tensions, charities operating overseas, geopolitical turbulence, hostile foreign states, and emerging technology and cyber risk.

How many charities are in financial difficulty?

Between October 2024 and September 2025, the Commission handled 235 cases about insolvency and financial difficulties, up 27.7% on the year before. Separately, its analysis found that around 41% of charities spent more than they received in financial years ending in 2024.

What guidance does the Commission point trustees to?

The assessment links to its guidance on internal financial controls (CC8), managing financial difficulties and insolvency (CC12), risk management (CC26) and the Trustee Finance Toolkit.

Test your charity against the regulator’s checklist

Enaid Accountancy works only with charities and third sector organisations. We review financial controls, build forecasts and management accounts that boards can act on, and help trustees weigh up options when finances are under pressure.

If you want an independent view of how your charity measures up, speak to the team.

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