2026, and Beyond Profit is turning 9.
It’s a huge achievement both professionally and personally, because running a business, and running a business that you are incredibly proud of, is not always a straight path, nor is it easy.
However, what does make it all worthwhile are the charities we support.
It gives us a sense of being part of something bigger. Building connections and partnerships that match our values and help us to grow.
Working closely with charities also provides a different perspective.
You see, firsthand, that decisions, especially financial decisions, are not always immediately visible for trustees, and we also see the true level of responsibility that trustees carry and the balance between delivering impact and maintaining sustainability.
Trends across the sector
For many sectors, trends come and go; however, for the charity sector, trends seem to stay and grow. For example, over the 9 years we have been involved in the industry, we have seen:
Funding continuing to shrink – the funding pool continues to get smaller every year. It may be that funding streams combine, funding criteria change to serve only some charitable areas, or there is simply no further funding available. This has been a considerable challenge for charity managers year-on-year as they look at diversifying income streams and alternative solutions.
Charities collaborating more – due to changes in funding and limited resources, we have seen and continue to see more and more charities working together. Whether this be on specific projects, funding applications, or for long-term service delivery. It’s always good to see charities working together, sharing resources, offering access to experience and expertise, and widening their reach.
Digital is growing – there is no running away from digital, and in fact, charities are benefiting greatly from the introduction of digital applications and AI adoption. Helping to support charity managers and streamline processes, digital is supporting charities to be more data-driven in their decision-making.
Public trust in charities remains high. Even in light of media reports and press enquires, people continue to support charities and trust in the work that they do and provide.
Common financial challenges
Managing a charity is not always straightforward; you need clarity, a sound financial understanding, clear communication, and clearer decision-making.
Some of the most common financial challenges we have seen across the sector include:
Rising operating costs – the costs of running a charity have increased twofold, and this has considerable consequences for charities everywhere.
Increase in demand for services – with an increase in demand for services, how can charities deliver more, with ultimately the same or in some cases less revenue?
An increase in competition for funding – due to the shrinking funding streams, competition for what is available has increased, limiting opportunities and access.
Limited financial resources or expertise – most small charities are not equipped to manage daily the financial obligations required by the Charity Commission. From day-to-day bookkeeping to reporting to trustees, management accounts, and financial accounts formatted for HMRC. Charity managers wear a number of hats, and trustees hold numerous responsibilities, and we know that not everyone is a finance expert.
Early warning signs that financial pressure may be developing
Some of the first warning signs that a charity may be under financial pressure include:
- Poor bookkeeping
- Financial reports not containing the right or enough information
- Reserves are being depleted, and quickly
- Your charity manager is under pressure
- Trustees don’t have a handle on finances or know exactly, in a snapshot, the financial state of the charity.
Our advice?
Charities must take a strategic approach to finances. An approach that involves everyone. Including all trustees and ensuring that everyone knows and understands financial reporting is key.
Boards must be proactive and ask questions if uncertain. Trust us, there is no silly question when it comes to finances, and there is almost certainly someone else sitting at the table wondering the same thing.
It’s also good to be open and transparent with your accounts. Monitoring these regularly and, most importantly, paying particular attention to your reserves policy. A reserves policy that is clear and communicated to everyone.
Remember, when we look at financial resilience, it’s not about holding as much as possible in reserves. It’s about balance. A balance that trustees must strike between sustainability and service delivery.
(Check out our post on reserves policies here. You may also find useful the recently updated SORP 2026 and CC12 guidance documents).
Charity managers and trustees can also tap into expert resources and support from companies like Beyond Profit. Acting as an extension to your team, we offer a range of finance services to meet your charity’s needs.
Characteristics of financially resilient organisations
So what makes a financially successful charity?
Those who are and continue to diversify their income streams, and do so confidently, as shown in their reporting, build resilience. They have a clear strategy, and ultimately, they’ve protected the charity if one income stream should suddenly stop.
In addition, those charities that have identified a clear reserves strategy and communicated this policy will create sustainability from their core. Building reserves and knowing why you are building these is a strong characteristic of a resilient organisation.
However, in our opinion, the biggest characteristic of those who are most resilient is those charities that are open with their communication. Where the entire board is fully aware of everything and everyone has financial oversight of the charity.
Where boards are involved, active, and challenge constructively. Building governance behaviours that support sustainability, trustees ask questions, leadership teams feel able to challenge and explore ideas, and where uncertainty is discussed, not avoided.
The strongest charities are not always the ones with the largest teams and most resources. They are the ones where conversations happen every day. Where there is a culture of transparency and openness, we often find better decision-making and stronger businesses.
The next nine years…
I am a strong believer that we all have the ability to make a difference. To build real connections that truly add value.
This is one of the key takeaways from my personal experience working with amazing people and charities over the past nine years.
That, and everyone’s determination to build resilience as they look at creative ways to continue to provide the services that they do, as they support people and connections more.
Being transparent with finances and ensuring that everyone takes responsibility for the charity’s financial health are the key areas that we have learnt about building financial resilience.
