Why good charity governance is about risk management
Julian Lomas
In late September the Charity Commission published its 2025 Charity Sector Risk Assessment. We know this sounds dull, but in reality it offers some interesting insights into the risks facing the sector based on the wealth of data available to the Commission including regulator investigations, public complaints, whistleblowing, annual accounts and returns and intelligence from other government departments and agencies.
The report shows that, despite continued high levels of public trust and confidence in charities, the number of reports of concerns about charities remains close to historic highs. This means that charities (of all sizes) continue to be at a higher risk of receiving ‘uncomfortable’ attention from the Charity Commission and should ensure that their governance is as strong as it can be.
The Commission’s research suggests that the highest risk facing the sector is financial resilience due to rising costs, continued challenges around access to funding and increased demand for services. This not surprising, particularly with almost half of small charities saying they are at risk of closure in the next year, according to a June 2025 report by the NCVO, Big Give and Global’s Make Some Noise Campaign.
The second big risk is charities being used or abused to generate unauthorised or unlawful private benefit. The Commission suggests three broad causes for this serious breach of trust:
Deliberate abuse of charitable status.
Dominant individuals and inadequate oversight or challenge from trustees.
Lack of knowledge or understanding amongst trustees and other charity personnel.
For both of these headline risks, the key safeguards recommended by the Commissions are about good governance, including:
Sound strategic and financial planning.
Robust financial controls and high quality financial reporting.
Ensuring (through advice and training) that any benefits to trustees and people connected to them are lawful and properly authorised.
Providing training for trustees on their core duties and responsibilities, in particular understanding the charity’s purposes (objects) and how each is delivered for public benefit.
Reporting concerns to the Commission or other relevant regulators.
The Commission also identified a range of other threats and risks:
Governance risks, including through lack of trustee expertise.
Safeguarding risks, including online abuse.
Fraud and other financial risks.
Emerging technology and cyber risks.
Social tensions.
Charities operating overseas, particularly in high risk countries/settings.
Geopolitical turbulence.
Hostile foreign states.
In each case, the Commission’s report points to the relevant guidance, usually on good governance to help minimise and/or respond to these risks.
This all underlines our view that good governance is. in the end, almost always about good risk management and vice versa.
The heightened risk environment facing charities and higher levels of scrutiny arising from complaints and concerns reported to regulators, makes it more important than ever that charities keep their governance arrangements under regular review, including seeking periodic input from an independent expert.
The good news is that we are receiving more and more requests to conduct governance reviews from small and medium sized charities who are essentially in good shape but who want to continue to improve and strengthen their governance. Historically, most requests were from charities facing a crisis or who are being required by a regulator or funder to get independent input. It’s good to see that for many smaller charities and independent governance review is becoming accepted good practice.
To find out more about the governance support and training we and our associates offer, including governance reviews, please contact us at julian@almondtreeconsulting.co.uk to arrange free initial telephone discussion.