What are the biggest risks for your charity and how to manage them.

One of the five priorities of the Charity Commission is to embrace technology to strengthen how it uses its data. Recently it has published its second Charity Sector Risk Assessment to provide an overview of potential risks for the sector and to support trustees and charity leaders in their decision-making, mining the range of data available to it.

Charities face increasingly complex attacks, so what are these threats, and how can charities deal with them?

Private benefit abuse

Private benefit abuse happens when a charity’s money, property or opportunities are used to benefit a trustee, someone connected to them, or another organisation, instead of the people the charity is there to help.

The commission reports a 29% increase in 2025-26 (374 cases) following a 38% increase in 2024-25.

Here’s what you can do to protect your charity:

• Identify and manage conflicts of interest and/or loyalty.
• Make sure any payments or remuneration to trustees or connected persons are properly authorised, whether by the charity’s governing document, by law or by the commission.
• When considering an agreement with a commercial partner, balance the focus on increasing the charity’s income with attention to its wider best interests.

Gaps in regulatory coverage

Sometimes there’s no other regulator with responsibility for a charity’s activities, or the regulator that does exist doesn’t have enough powers or resources to act. This gap can leave beneficiaries exposed to risk and gives bad actors room to exploit the lack of clear oversight.

This is why culture matters as much as compliance. Principle 4 of the updated Charity Governance Code, “Ethics and Culture”, calls on trustees to agree the standards and values that shape how their charity behaves. Charities should be driven by their values, not just their purpose.

Use the resources available

Your people are always your best defence against fraud. There are plenty of free online resources to equip your organisation to meet the fraud threat.

Get involved in Charity Fraud Awareness Week coming up this November and take the fraud pledge, to work actively to prevent fraud wherever it might occur in your organisation.

Financial resilience under pressure

In 2024 around 2 in 5 charities (41%)  charities had expenditure that exceeded income.

The Commission advises trustees to take time to undertake careful and considered financial planning. It has issued guidance to help charities.

Technological developments

In the past year 30% of charities reported experiencing a cyber-attack, with phishing being the most common and disruptive type. There has also been a notable increase in ransomware attacks, whilst misuse of AI could contribute to increased risks to charity beneficiaries and employees.

Consider how you might use AI: maybe that could involve AI-drafted grant applications built from real data, or generating bespoke reports for major donors showing exactly what their contribution achieved, pulling from outcome data, beneficiary numbers, and programme milestones to create a compelling, individualised narrative.

Have an AI policy and then implement it.

Safeguarding

Remember the commission considers “safeguarding” to be keeping safe from harm all who come into contact with your charity.

Create and maintain a culture where anyone can challenge and raise concerns, especially about those who hold the power, implement a clear whistleblowing policy and process and continually learn from failure and near-misses to improve. 

Governance in turbulent times

There is an increase in commission case work related to allegations of extremism or charities acting outside their purposes.

Charities best manage the risks they face when they focus on advancing their charitable objects (the “why”); in the right way (the “how”); to achieve positive outcomes (the “what”).

What’s in a name?

A rose by any other name would smell as sweet, but the essence of “charity” is apparent from its name, love unmotivated by self-interest.

On 31 March 2026, there were 171,112 charities on the register and during the financial year 2025-26, the commission regulated £107 billion of charity income. These are big numbers, but they are all driven by concern for others and all this impact is enabled by the good hygiene of proper charity governance.

Join us for our webinar this Autumn

Learn more at gunnercooke’s charity law and governance update webinar this Autumn. You can sign up HERE.