“The only constant in life is change” said the Greek philosopher Heraclitus in around 500 BC – perhaps this adage is more apposite than ever. And particularly as we consider the evolving landscape of UK charities.
As nominee for the next Chair of the Charity Commission, Julia Unwin, when being scrutinised by the Culture, Media and Sport select committee as part of her appointment process said at the end of last year, “I have to say, I have never seen the charitable sector so brittle, so challenged, and in such difficulty”. Given that I met Julia about 20 years ago when I was a young buck and she was already well established as a doyen in the sector, what she said carries significant weight.
I want to explore in this short article the operating context of charities in 2026 and what the future might hold – with the specific intention of providing trustees with a wider perspective which in turn I hope will help you be more effective in your role.
Firstly, you’ll be interested to know that last year there were 10,000 new charity applications rather than the usual 5,000. AI seems to have enabled an increasing number of applications. With this increase we have seen increased levels of fraud which explains why the usual Charity Commission approval rate for charity applications has dropped to just over 50% from the usual c.75%. The commission is successfully holding the gate. But for me the key take away is that charity is still very much alive and needed – why else would they be established in such numbers? But it is a sector that is struggling.
Let’s explore the operating context:
The Budget – the Charity Finance Group (CFG) co-chief executive Sarah Lomax, described the last budget as a “mixed bag” with “little to ease the concerns around the financial sustainability of the sector”. The general view seems to be that charities were overlooked and with factors such as the increase to minimum wage, things will be increasingly tough – which is a hard pill to swallow when you realise charities pick up so much of the otherwise unmet needs in society.
Charities are not only having to contend with the budget implications, in the last few weeks there has been a New code of governance (with an increased focus on compassion and even a requirement that trustees should be ‘courteous’), a new code of fundraising (more principles based, in other words less prescriptive allowing for more flexibility) and new a Charity SORP. So, there is a lot for trustees to be across.
Financial constraints have been increasing partly because the public sector is under pressure and charities tend to step in. Public sector margins for work, particularly in social care, are slim or non-existent at the best of times and charities are increasingly refusing to do things at a loss. There are some outliers such as The Salvation Army who as part of their delivery model are happy cross subsidise, but I fear this sets up unrealistic expectations for those charities not sitting on hundreds of millions in the bank. Furthermore, due to increased competition for funding more charities are seeking funding from diminishing pots both in number and size.
We are seeing the effects of this played out in real cuts with the RSPCA recently offering all permanent staff (except the senior team) the opportunity to apply for voluntary redundancy, the NSPCC reducing headcount by 14% and the disability charity Sense reducing headcount after three consecutive years running an operating deficit. The Samaritans has also posted three successive operating deficits and is closing half its branches.
Giving from the general public is under pressure and corporate funding also. Corporate funding is an alternative source of income for many charities, but it requires a degree of marketing skills not found widely in the sector. And in any case, large firms are inundated with requests and so the odds of a small charity, which means one of the97% charities with an income under £1m, securing funding, is by definition a very tough ask. So, charities need to look at other forms of funding including social finance, and commercialisation of its assets, more on which later.
Volunteering is down and so organisations such as the Royal Voluntary Service have established platforms such as GoVo in partnership with media firms such as ITV to encourage more volunteers. Volunteering particularly needs the young.
So, what is the right operating model for charities in 2026 and where should the focus offboards be?
Governance is the foundation and I’m still amazed by how many charities come to us for retained headhunting services but their thinking is so often constrained by budgetary concerns rather than seeing that investment in appointing the right people to their boards will reap dividends in the longer term, and often even in the short term – I don’t subscribe to the belief that it takes over 18 months before a new board member starts adding value.
So as board members we need to think about the composition of our boards which means the right balance of skills and experience. And also, and just as importantly, the right behaviours.
The right shape of management teams needs to be considered (a difficult balancing act given the downward pressure on salaries) but where possible charities should not be afraid to pay to attract high quality people.
Boards need to be thinking about all these things including approaches to shared services, financial resilience and income diversification. Many charities are seeking board members with commercial skills who can help them think through commercial strategies. A few weeks ago, I spoke with a charity in the STEM sector who want to recruit a trustee who can help them think through their commercial strategy, in part because as they move to open source their intelligence for the good of mankind, they are losing an important source of income. About an hour after that call, I had an almost identical call with an institute looking to develop its global footprint, partly as a way of develop its financial resilience.
Digitisation continues to be a pressing concern. Data and analytics can help extend reach and demonstrate impact. Where charities don’t have the digital infrastructure there is a risk that they will be left behind. Boards need people who know how digital can be deployed.
There are more mergers taking place than ever before. I recently heard the head of charities at a law firm say that trustees should be encouraging relationships with competitors and be thinking about purpose rather than status – because it is hard to merge with organisations you don’t like. Charities should know their dance card. Too often mergers are sought when the balance sheet of one or both parties is zero but that’s like two drunken men trying to hold each other up – what makes you think that is going to work? So, think about mergers earlier, perhaps raise once a year at a board meeting – at the very least know who the other key players are. I’m delighted that the former charity I chaired, Kidscape, has recently found safe harbour by folding into Coram.
And so, this a terribly exciting time to be on a board! If there was nothing to do or everything was fine how boring would it be! You have a real opportunity to help your beloved organisations survive and thrive. It’s not about turning up to the odd board meeting and basking in the warm glow of all the great work being done. It’s a time to be engaged, in the fight, and straining every sinew.
Some words of reassurance.
Whilst the Charity Commission is more proactive and indeed Julia who I mentioned earlier wants the commission to have yet sharper teeth, the reality is that the UK, to quote David Holdsworth the CEO of the Charity Commission, is still an “island of stability” in an unpredictable world and the rule of law, a commitment to transparency and good governance, mean charities exist in an environment that sets them up to thrive.
Of the c.170,000 charities in England and Wales the Charity Commission has as of a few weeks ago only 400 live cases where they are investigating charities. 92% of these investigations results in the commission just giving advice. In 8% of the cases trustees have left decisions too late and they face impossible challenges because difficult decisions have been kicked down the road. So, as a board, my advice is lean in early and be brave. Not making a decision is a decision! When the challenges are greatest, so are the opportunities. Who was it that said, ‘never waste a good crisis’. Venture forth we must.
A few final practical tips from my observations of years of working in the sector!
As a board don’t ask the CEO for things you don’t need because it is undermining and time wasting. And specifically finance trustees should not be pestering the finance team for information that is not required, just to satisfy their own curiosity. Be respectful and mindful of the role of the staff team. And recognise that for them board meetings are often the thing they get most anxious about. Choose battles and not pet projects!
Trustees should know the backgrounds of the senior leadership teams before lecturing them on things they already know. Often the expertise lies with the executive and board members with similar skills need to know how to be additive and complimentary.
Ensure trustees are adding value which is not to say you should be commenting on every little thing. Be prepared before board meetings and know which things are important. You are more likely to be listened to if your interventions are not a constant flood.
Be careful not to translate big corporate experience to a small charity – which as I heard someone say recently, is about as helpful as a chocolate teapot. Some of your corporate experience will be super helpful but it doesn’t always map perfectly onto a local community charity with five staff!
And always remember to focus on the charity’s North Star and what the priorities are.
David Miliband spoke at a conference a few weeks ago organised by the law firm BatesWells whose foundation board I sit on. He said that in politics he believed hope was a driver of action. But he realised he was wrong. He said, “It’s action that drives hope”. And that is something as trustees you can make sure your organisation does!
I want to conclude with one of my favourite poems: by Christopher Logue, which I think captures the spirit we and our whole boards need to have when deciding to step up to the very real challenges before us.
Come to the edge.
We might fall.
Come to the edge.
It’s too high!
Come to the edge!
And they came,
And he pushed,
And they flew.
Thank you to the almost one million people serving as charity trustees.
By Ian Joseph, Managing Director, Trustees Unlimited
