Charities need to work smarter in the face of falling donations
A spate of recent reports seemingly offer conflicting messages about the financial environment in which charities are currently operating.
For example, an NPC report shows that the total value of the UK’s “impact economy” is £428bn and the Charity Commission’s annual return analysis for 2024 shows that total grows income for registered charities passed £100bn for the first time in 2024 (£102bn in total, up from £96bn in the previous year). Total spending was also up to £101bn from £94bn in 2023.
However, these surpluses need to be seen in the context of pre-pandemic data: the 2023 surplus of £701m was a five year low for the sector and the £1bn surplus in 2024 remains low by historical standards. Over 40% of registered charities reported a deficit and small charities (income under £500k a year) are particularly struggling, with a cumulative deficit of £290m in 2024 (£416m deficit in 2023).
With almost a third of charity income deriving from donations and legacies, this is perhaps not surprising (these are income sources small charities often struggle to access at scale). On top of this, the Charities Aid Foundation 2026 UK Giving report estimates that public donations fell by 10% last year, from £15.4bn in 2024 to £14bn in 2025: the first fall since 2021 (at the height of pandemic economic impacts). The average donation also fell from £72 in 2024 to £65 in 2025 and the report estimates that the number of people donating to charity has fallen from 37 million in 2016 (69% of the adult population) to 31 million in 2025 (55% of the adult population).
For small charities in particular this all looks rather gloomy, particularly when set against continued challenges surrounding grants fundraising, with many funders closing, narrowing their criteria or reducing the amount they can give at a time when there are more charities seeking that funding.
And yet, the sector continue to grow overall.
To us this suggests two conclusions:
Bigger charities are doing better than smaller charities when it comes to income generation.
Charities need to continue to invest in innovation to diversify their income and funding.
Henry Ford’s adage “if you always do what you've always done, you'll always get what you've always got”, seems to be optimistic for any charity in the current economic and fundraising environment, particularly for smaller charities.
With rising competition and reduced funding from the more traditional sources of grants and donations, perhaps this should more properly be if you always do what you've always done, you'll get less than you used to get.
We think now is the time for small charities (in fact all charities) to invest in increased capacity, training and support both for income generation and fundraising and for underpinning systems, infrastructure and governance.
Prof Tony Chapman, author of a report in the set of Third Sector Trends reports released between October 2025 and February 2026 seems to agree with us. Speaking at a March 2026 Findings From Third Sector Trends event Prof Chapman, said that charities often seem to feel that “money is the answer to all problems” so they do not not invest in themselves as much as they should.
For example, the report shows that most charities want training on income generation but few want training on, for example, trustee development. yet an effective board is essential for charities to have the confidence to take risks and invest in new ways of raising money. In the light of the data above, it is essential for trustees to have the confidence and expertise to decide on such investments, properly monitor progress and change tack in a timely way if things don’t turn out as planned.
There are no guarantees in the world of charity fundraising and income generation, but in our view, the nearest to a guarantee you can get is that business as usual for fundraisers will yield gradual, and eventually catastrophic, decline for most small charities.
All charities need to give careful and urgent thought to their fundraising strategy and we can help.
At Almond Tree Consulting, we help organisations adapt and strengthen their fundraising approaches, creating strategies and plans that are practical, realistic and sustainable. Our advice blends insight and hands-on experience, helping you make confident decisions that align income generation with your mission and values.
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