The Commission publishes its annual risk report for 2026

Public trust in charities has remained consistently high since 2020, with only doctors ranking ahead of them as a trusted group. That confidence is built in several ways: through the visible impact charities have in communities, the personal experiences many people have as beneficiaries, volunteers, or donors, and the broad perception that charities exist principally to 'do good'. Regulation and oversight by the Charity Commission also provide important assurance that charities are subject to standards of governance and accountability and must exist for public benefit. 

However, the same features that make charities trusted can also make the charity 'wrapper' attractive to opportunists. Charitable status can lend credibility, unlock tax and funding advantages, and create an assumption of legitimacy. Where that trust is exploited, the risk is not only financial loss or private benefit, but damage to confidence in the sector as a whole. 

The Report:

The Charity Commission’s 'Charity Sector Risk Assessment 2026' underlines that charities are operating in an increasingly complex risk environment, shaped by financial pressure, governance weaknesses, technological change, and the risk that charitable status may be abused for private advantage. 

Charitable forms can be misused in several ways. One common risk is inappropriate private benefit, where charity funds, assets, or grants are channelled to individuals rather than applied for public benefit. The Commission has seen this reflected in a sustained upward trend over recent years in cases raised about charitable status being abused for personal gain.  In 2024 -25, there was a 38% increase in such cases (rising from 211 to 291), followed by a further 29% increase in 2025 - 26, when the number reached 374. 

Unmanaged conflicts of interest create similar exposure, particularly where trustees or senior leaders make unchecked financial decisions that benefit their own businesses, family members, or other connected parties. 

A newer and increasingly significant risk arises from generative AI. The Commission’s report highlights the wider risks facing charities from rapid technological developments, including the use of AI to support fraudulent applications to register charities or apply for grants. In response, the Commission applies robust checks to registration applications: fewer than half of applications received are now approved, with 45% leading to registration, compared with 72% in 2016 - 17. 

How to protect your charity:

Public trust is one of a charity’s most valuable assets, but also one of its greatest vulnerabilities. Charities should treat the risk of abuse as a core governance issue rather than a routine compliance exercise. 

As examples of key issues to focus on, trustees should maintain:

Clear financial controls: establish proper segregation of duties, accurate decision-making records, and regular scrutiny of unusual transactions, credit cards, connected-party payments, and grant arrangements. 

Proactive conflict management: identify, declare, and manage conflicts of interest early so that (for example) conflicted individuals cannot influence decisions from which they or connected parties may benefit. 

Proportionate due diligence: carry out appropriate checks on trustees, senior staff, major donors, grant recipients, delivery partners, and intermediaries, particularly where funds move through complex or overseas structures. 

Vigilance for red flags: remain alert to warning signs such as pressure to move money quickly, excessive fees, tax-driven arrangements, or weak evidence of public benefit. 

Strong governance, transparency, independent advice where needed, and prompt reporting of serious concerns remain essential to preserving charitable funds and public confidence. 

Please note that this article was also authored by Binta Tait-Moses - Legal Counsel at Guy's & St Thomas' Foundation.