Charities may face an uncertain future unless they remain agile and responsive to ever-changing sector demands, an annual event in Southampton was told. And with ongoing economic volatility curbing individual donations, charitable organisations are having to employ different tactics to stay afloat and maintain their vital services.

Helping to keep the sector in the spotlight, Hampshire business advisory and accountancy firm HWB Chartered Accountants linked with Handelsbanken to host its regular Charity Roundtable seminar and discuss the challenges facing the Charity Sector.

The meeting, this year at Handelsbanken’s Oceana House offices in Southampton, was attended by a mixture of regional charities representing different aspects of the third sector.

Keynote speaker James Sproule, UK Chief Economist at Handelsbanken, addressed the meeting on the UK Economic Outlook and painted a less than optimistic picture. He said UK economic growth was underpinned by an over-optimistic 300,000 a year house building target and so forecast a subdued recovery.

Inflation was expected to remain above the 2% target through 2027 with service sector inflation a big driver, however, three cuts in the Bank of England base rate, currently at 4.25%, are forecast in the coming 12 months, followed by a slowly rising rate from the end of 2027.

Consumer and business confidence was likely to remain subdued, but high personal and business savings rate and accumulated savings would leave balance sheets in good shape. James said that in the autumn the Government was likely to raise taxes to an all-time high, but the budget would remain in deficit.

Kim Christopher, Corporate Account Manager at Handelsbanken, then co-chaired the round table discussion as the charities present outlined their opportunities and challenges. She said:

“A forum such as this is an excellent way for charities to take a step back from their daily work and meet others in a similar position to collaborate, share ideas and best practice and simply find out what others are doing and how they are coping with today’s pressures."

“Much of the discussion centred on the importance of charities remaining agile to adapt to the ever changing financial, social and economic environment. It was good to see that the sector remains resilient as it is difficult to imagine the impact on the vulnerable if some of the vital services provided by charities were withdrawn.”

Michaela Johns, Director at charity sector specialists HWB Chartered Accountants, who co-chaired the discussion, added:

“We talked about IHT planning and the opportunity that exists for charities to appeal to those who may have spare savings to make one-off gifts. Legacy planning is a discussion many charities are trying to encourage. Talking about wills could well ensure people plan for the future and this could help charities in the long term."

“We suggested that it was important for charities to review their risk register – similar to a business continuity plan for companies – and actually test some of the area to see if they could cope if the worse were to happen."

“There were also good discussions about mergers and shared resources, and it was felt that collaborations are more prevalent than ever in the sector, which is excellent to see, as for too long charities in similar fields have operated wholly individually despite possibly being able to serve their clients better by working together.”

Michaela said that charities might be able to adopt measures to mitigate the significant increases in employer National Insurance contributions (NICs) which were introduced in April, such as introducing or enhancing salary sacrifice schemes, thus cutting some of the increased NIC costs.

The Charities Aid Foundation’s UK Giving 2025 Report reveals that charities are now relying on donations from only 50% of people, down from 58% in 2019 — equivalent to approximately four million fewer donors.

However, despite continued financial uncertainty, the UK public donated an estimated £15.4 billion to charity in 2024, including an estimated £2.2 billion to health causes such as hospices and medical research charities. Also, an estimated 5.6 million people volunteered.

Among the challenges facing the charity sector mentioned by attendees at the Southampton event were resourcing issues, with income stable but costs increasing. Also, donors were not increasing direct debit contributions in line with inflation.

Funding remains a major factor in a tough economic environment, with encouraging participation in events and challenges getting tougher. Additional demand for services exacerbates the lack of increased income.

One delegate spoke of the difficulty of funding longer term work as it could be hard to demonstrate what the impact would be, and a lot of grants were for short term.

Staffing was also a big issue as organisations needed more numbers to be able to expand services but the retention of staff, particularly in tough physically and mentally demanding job was increasingly difficult. Staff costs were a growing percentage of total costs.

Both HWB Chartered Accountants and Handelsbanken offer enhanced services for the charity sector.

Chartered accountants HWB, based at Chandler’s Ford, near Southampton, provides business and tax advice.

Photo: Charity Challenges: Michaela Johns, left, of HWB Chartered Accountants, with Kimberley Christopher, of Handelsbanken, who co-presented a Charity Roundtable seminar in Southampton at which regional charities got together to discuss challenges and opportunities and share best practice