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Charities face attacks from bad actors using increasingly complex methods, and sometimes exploiting overlaps between different regulators, according to an official report.

The Charity Commission鈥檚 second annual Charity Sector Risk Assessment highlights a sustained increase in concerns raised about charitable status being abused for private benefit, with a 29% increase in 2025-26 (374 cases) following a 38% increase in 2024-25聽(291 cases, up from 211 in 2023-24).

The Commission reports an increase in 鈥減articularly complex case work鈥�, often involving charities operating in fields where there are multiple regulators, or where the boundaries of regulatory remits are not clearly drawn.

This growing complexity has seen the charity regulator formally pass information to other agencies - including HRMC, the police, and local authorities 鈥� 500 times in the last year, up 8% on the previous 12 months.

Similarly, while the quality of some charities鈥� services is clearly regulated - such as educational charities regulated by Ofsted and care services regulated by Care Quality Commission 鈥� the Commission warns that some charities provide sensitive services to vulnerable groups in areas that do not have subject-expert regulation, including charities providing out of school settings and certain housing services. In some cases, the regulator is concerned that users may have little opportunity for redress if the quality of the services they receive is inadequate.

The Commission itself, as charity law regulator, assesses concerns about charities鈥� governance or compliance with their legal duties and takes action wherever appropriate. However, it does not have the powers or resources to ensure services are of sufficient quality or meet standards users might legitimately expect.

The Commission has raised its concerns about risks facing charities and beneficiaries with government and wider stakeholders, and in the meantime urges trustees to undertake sufficient due diligence before entering new service delivery arrangements and to look to best practice in their field.

The report also echoes calls from the National Lead Police Force for Fraud, for the policing and intelligence gathering response to keep pace with the huge increase in reported fraud in England and Wales.

Mixed financial picture with signs of recovery alongside continued strain

Separately, the Commission鈥檚 report highlights that there has been a small increase in sector income, marking the potential early signs of some financial recovery, but that this is uneven, with continued challenges to financial resilience for many parts of the sector. While data from charities鈥� annual returns and reports suggests a slight overall recovery 鈥� income growth narrowly exceeds growth in charities鈥� total spend 鈥� margins, especially for smaller charities remain tight. 2 in 5 charities saw spending exceeding their income, and one in 4 charities with incomes below 拢10,000 reported only just breaking even in 2024.

The Commission encourages trustees to take time to undertake careful and considered financial planning, ensuring income is aligned with operating costs, and to regularly review financial forecasting, taking early steps where variations to costs or revenue point to potential shortfalls.

Wider risks

The Commission鈥檚 report highlights a number of wider risks facing charities, including those increased by rapid technological developments, with AI facilitating, for example, fraudulent applications to register a charity or apply for grants. The Commission applies robust checks on registration applications, with fewer than half of all applications received by the Commission (45%) now being approved and leading to the registration of a new charity. By comparison, in 2016-17, 72% of applications resulted in a charity being registered.

Safeguarding risks continue to feature significantly in the Commission鈥檚 case work, with around a quarter of concerns raised with the Commission over recent years relating to safeguarding. The regulator highlights in particular the need for trustees to pay care and attention to handling allegations related to individuals in positions of power or influence, including spiritual influence. 聽

The Commission鈥檚 assessment also, as last year, points to the risk to charities of governance weaknesses, growing social tensions and divisions, and geopolitical turbulence, with an increase in case work related to allegations of extremism or charities acting outside their purposes, notably in the context of the Israel Palestine conflict.

Paul Latham, Director of Communication and Policy at the Charity Commission, said:

The vast majority of charities are well run, making a positive difference to lives and communities every day. However, our assessment highlights the growing scale and complexity of risks they face, including from those seeking to exploit charity status for personal benefit, and from a lack of regulatory clarity which potentially leaves service users exposed to poor services or harm. While proportionally relatively few charities are directly affected by such threats, their impact can be significant, for the individual charities, the Commission鈥檚 resources, and public trust and confidence in charities.

We have taken action in specific cases where we can, while also alerting and ensuring relevant government departments and other responsible bodies are aware of these gaps. We will continue working with our partners in government and across the sector to find shared solutions.

Overall, our review of the risks facing the sector underlines the huge contribution that voluntary trustees, who carry ultimate responsibility for charities, make to our society and communities. Their role is often complex and demanding, but they provide society with a great, and often underappreciated, service.

The Commission鈥檚 risk assessment draws on a range of sources, notably charity accounts and trustee annual reports, reports of serious incidents, case work and investigations, and intelligence referrals from other government agencies and statutory bodies.

Its purpose is to help trustees in undertaking their own risk assessments and updating their risk registers, and to encourage them to consider how wider sector risks might apply to their own charities, and what steps they might take to protect their charity against potential harm.聽

ENDS

Notes to editors

Contact the Charity Commission Press Office at: pressenquiries@charitycommission.gov.uk

Out of hours, please call us on : 07785 748787

1. The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society.