What the Charity Sector Risk Assessment 2026 means for charities

The Charity Commission’s Charity Sector Risk Assessment 2026, published on 18 August 2026, provides a useful snapshot of the strengths and vulnerabilities across the sector. While the report highlights encouraging signs of resilience, it also identifies several emerging risks that finance professionals, trustees and senior leaders should not ignore.

Financial resilience remains critical

One positive finding is that, across the sector, charity income continues to exceed expenditure. This demonstrates the resilience that many organisations have shown in navigating recent years of economic uncertainty. But charity leaders should be cautious about taking too much comfort from this headline figure. The assessment is based largely on 2024 financial data, and the operating environment has become more challenging since then. Geopolitical instability, including the economic consequences of the US-Israel-Iran conflict, has increased financial uncertainty, while rising inflation and higher energy costs continue to place pressure on both charity budgets and household finances.

For many organisations, maintaining financial resilience will require more than prudent budgeting alone. Robust forecasting, scenario planning and regular stress testing are becoming increasingly important management tools.

From a Moore Kingston Smith Nonprofit Advisory perspective, charities should be reviewing the robustness of their financial forecasting processes and considering alternative operating models that could improve efficiency without compromising impact. This may include sharing back-office functions, forming strategic partnerships or exploring joint ventures with organisations delivering similar charitable objectives.

Fraud risk and ECCTA compliance

The risk assessment also points to structural vulnerabilities where the regulatory framework does not always extend to all areas of concern. One area requiring particular attention is the implementation of the Economic Crime and Corporate Transparency Act 2023 (ECCTA). Larger charities with turnovers above £36 million are now subject to the new failure to prevent fraud offence. This places increased emphasis on having documented and effective fraud prevention procedures in place. Responsibility extends from trustees and senior management through to employees, contractors and other associated persons. These controls must not remain static. They should be regularly tested, monitored and updated as risks evolve.

Governance under pressure

The Commission’s findings on governance paint a mixed picture. It is encouraging that concerns regarding trustee decision-making appear to be declining. However, the increase in disputes within charities suggests that many organisations are experiencing greater internal pressure, often linked to financial challenges and competing priorities. Strong governance remains one of the most effective ways to manage organisational risk. Charities can benefit from reviewing how decisions are made, how challenge is encouraged and whether governance structures remain fit for purpose. Using the Charity Governance Code as a benchmarking framework can help identify weaknesses before they develop into more significant issues.

Managing cyber and AI risks

Finally, the assessment highlights the growing risks associated with artificial intelligence (AI), emerging technologies and cyber threats. The rapid adoption of AI brings significant opportunities, but it also creates new vulnerabilities. Cyber criminals continue to target charities through phishing attacks, impersonation fraud and other increasingly sophisticated methods. While technology controls are important, people remain the first line of defence. Regular staff training, awareness programmes and simulated testing exercises can significantly reduce exposure to cyber risks. Moore Kingston Smith’s Risk Advisory team works with charities to review cyber resilience, strengthen staff awareness and evaluate whether existing controls remain effective in a rapidly changing threat landscape.

What should charity leaders do next?

For charity leaders, the message from the Charity Sector Risk Assessment 2026 is clear: resilience today does not guarantee resilience tomorrow. Financial planning, strong governance, fraud prevention and cyber preparedness should remain central priorities if charities are to continue delivering sustainable public benefit in an increasingly complex environment.

How can we help?

As financial, regulatory and cyber risks continue to evolve, charities can benefit from an independent assessment of whether their governance, risk management and financial planning arrangements remain robust.

Moore Kingston Smith’s Nonprofit Advisory team helps organisations identify emerging risks, strengthen resilience and implement practical improvements that give trustees and senior leaders greater confidence in their decision-making and support long-term organisational sustainability and impact, while delivering public benefit.