Charity 2026: Navigating the Year Ahead

The operating environment for UK charities in 2026 presents a complex intersection of economic constraint, social hostility and institutional ambiguity. For charity leaders, trustees and staff, understanding these dynamics is not merely useful but necessary for organisational survival.

As demands for services increase, the voluntary sector needs to find a way to adapt and survive. Not for the sector itself, but the rights holders across the country who fall through the cracks of public services and are deeply dependent upon the crucial work of charities and community organisations.

Economic Pressures: The Triple Crunch

The sector continues to experience what has become known as the triple crunch: rising operational costs, declining income and escalating demand for services. These pressures, which emerged during the pandemic and intensified through the subsequent cost-of-living crisis has shown little sign of improvement. Charities have recently experienced a downward trend in charitable income. Most recently, Charities Aid Foundation’s annual report on UK giving found that millions of donors are giving less than in pre-pandemic years. This aligns with MCF’s own research at the height of the cost-of-living crisis, which found that nearly half of British Muslims anticipate reducing charitable contributions due to inflationary pressures on household budgets, including energy bills and food costs.

Simultaneously, the National Insurance contribution increases introduced in 2025 have imposed additional cost burdens on employers across the sector. For larger organisations with diversified funding, these increases may be absorbable. However, for smaller charities operating on thin margins, they represent existential threats, forcing difficult decisions regarding staffing levels, service provision and organisational scope.

The resulting squeeze is particularly acute because it occurs against rising demand. The communities charities serve face the same economic pressures, generating greater need precisely when organisational capacity to respond is diminishing. Financial resilience, once a matter of good governance, has become a prerequisite for continued operation.

A Hostile Environment

Beyond economic factors, charities working with or on behalf of minoritised communities face an increasingly hostile external environment that carries a physical, operational and psychological cost.

Since the riots following the Southport attack in August 2024, a range of organisations have reported significant increases in violence, threats, racist abuse and intimidation. Those affected include refugee and asylum seeker charities, Muslim and Jewish organisations, ethnic minority groups, faith bodies, women’s organisations, youth services, homelessness charities and even charity retail operations. The breadth of targets suggests a generalised hostility toward civil society actors perceived as serving or representing minority interests.

The phenomenon extends beyond obviously connected organisations. Prostate Cancer UK reported receiving racist abuse, as well as direct debits cancelled in response to a public health campaign highlighting the disproportionate impact of prostate cancer on Black men. The campaign was clinical in nature, yet provoked racially motivated harassment.

For affected charities, this environment imposes tangible costs: expenditure on physical security, reduced office hours, resources diverted to staff welfare and well-being support. These represent direct subtractions from charitable delivery. Less quantifiable but equally significant is the chilling effect on programmatic ambition, as organisations calculate reputational and security risks before undertaking work that might attract hostile attention.

Institutional Relations: Charities and Campaigning

The change of government in 2024 brought renewed commitment to civil society partnership following nearly 15 years of troubled relations between government and civil society. The publication of the Civil Society Covenant represented the culmination of extensive consultation with sector bodies and signalled, in principle, a more collaborative approach to policymaking.

However, prior to the publication of the covenant, several significant policy decisions affecting the sector were taken without meaningful civil society consultation. The National Insurance increases proceeded despite sector warnings about disproportionate impact. Reforms to health and disability benefits, projected to push 400,000 people into poverty, and the 0.5% reduction to Official Development Assistance to fund defence spending was followed a similar pattern of lack of consultation despite warnings from the sector.

The downstream effects of such decisions compound existing pressures. Reduced ODA means diminished public funding for international NGOs. The UK’s rejection of a prevention plan for El Fasher, opting for minimal intervention months before RSF massacres, illustrates the human consequences of constrained humanitarian budgets. Domestically, welfare cuts could increase poverty, which in turn increases demand on charitable services already operating beyond capacity.

Consequently, political and institutional engagement is no longer optional; it is as vital as our programmes to achieve our charitable objectives. Public bodies and local authorities must work hand in hand with local voluntary organisations to deliver services that will address pressing needs of local communities. National organisations and infrastructure bodies ought to have a seat on the table as they continue to advocate for the voluntary sector.

Strategic Implications

The challenges outlined above are significant in magnitude, but not insurmountable. The charitable sector has faced challenges over history and has responded through adaptation. By leveraging current technologies, building partnerships, lobbying for change and building internal resilience, the sector today can still survive. Whether through the adoption of responsible AI and a robust digital strategy for increased efficiency, or the diversification of income streams through sustainable funding models. Perhaps most importantly, active engagement with local authorities, public bodies and central government through mechanisms including the Civil Society Covenant. The sector enters 2026 facing genuine difficulties. Those organisations that prepare now, strengthening financial foundations, investing in staff welfare and treating political engagement as an obligation rather than an option, will be best positioned to navigate what lies ahead.