Almost nine in 10 (88%) UK charity leaders are concerned about the financial impact of potential tax rises or benefit cuts in the autumn Budget, according to research from Rathbones. More than eight in 10 (84%) believe such measures are highly likely to be announced.
The study asked 100 senior charity executives, representing charities with a collective £5 billion invested in equities, about the biggest risks facing the sector. Beyond the potential impact of the Budget, the findings point to significant operational concerns, led by cyber threats and legal compliance.
David Cox, Director of Charities at Rathbones, said:
“Charities are navigating financial uncertainty alongside a growing range of operational risks. While the possible impact of tax rises or benefit cuts is understandably front of mind, resilience depends on more than funding alone."
“Cyber security, legal compliance and succession planning may receive less attention, but weaknesses in these areas can have serious consequences for charities and their beneficiaries. Strong governance, secure infrastructure and robust operational processes are therefore increasingly important.”
Looking ahead to the next 2 years, charity leaders identified operational risks as the most immediate threats to organisational continuity. A cyber-attack or data breach compromising donor, beneficiary or supporter data is the single biggest risk, cited by a third (34%) of respondents. This is followed by regulatory changes or compliance penalties, identified by 21% of charity executives.
Frontline staff burnout and difficulty recruiting qualified workers are seen as the biggest risk by 18% of charity leaders. Insolvency driven by falling public donations and inflation is the top concern for 14%, followed by reputational damage from public scandals or negative media coverage, cited by 13%.
While cyber risk leads charities’ forward-looking concerns, legal compliance is the area in which organisations have felt most exposed over the past year. The research also points to concerns around digital security and outdated IT infrastructure.
More than half (56%) of charity leaders identified legal compliance — including employment law, safeguarding and GDPR — as an area of vulnerability over the past year. This was followed by digital security and outdated IT infrastructure, cited by 50%. Succession planning for leadership roles and trustee vacancies was identified by 45%, while 33% pointed to the loss of statutory contracts or central government funding streams.
Biggest vulnerabilities faced by the charity sector over the past year
Legal compliance e.g. employment law, safeguarding, GDPR | 56% |
Digital security and outdated IT infrastructure | 50% |
Succession planning for key leadership and trustee roles | 45% |
Loss of statutory contracts or government funding streams | 33% |
Public trust and maintaining a positive brand reputation | 5% |
Biggest risks facing the charity sector over the next 2 years
Cyberattacks or data breaches compromising donor or client information | 34% |
Regulatory changes or compliance penalties from watchdog bodies | 21% |
Frontline staff burnout and inability to recruit qualified workers | 18% |
Financial insolvency due to falling donations and rising inflation | 14% |
Reputational damage from a public scandal or negative media coverage | 13% |
