Charities monthly round-up – October 2025

Spooky season is upon us, the nights are drawing in, the clocks are going back and most frightening of all: Christmas decorations are showing up in the shops. It must be October.

Fortunately, our newsletter is not going to fill you with fright, though the theme of funding and finance might make you tremble.

Risky business: Charity Commission publishes its first Charity Sector Risk Assessment

The Charity Commission (the Commission) has published the first-ever risk assessment for the charity sector. Whilst largely praising the strength and resilience of charities, the assessment highlights some challenges being faced by the sector.

‘Money money money’: Financial resilience a concern for charities
It won’t come as a surprise that the financial squeeze that many charities are facing tops the list of the Commission’s risk assessment. From the increased cost of living to soaring utility costs, many individuals are struggling, resulting in an increased demand for charitable services as well as a decrease in donations. The Commission has seen the number of cases involving charities facing insolvency or financial difficulties nearly double from 2022-23 to 2023-24.

What can trustees do?
There is no magic silver bullet to solving financial pressures; to be forewarned is to be forearmed. Financial planning will always be a vital component for charities and trustees should ensure their plans are up-to-date and provide scope for any additional expenditure that may appear throughout the year. Trustees should consider:

• How the charity engages with its target demographic. Are there any opportunities to strike a chord to encourage greater donations? Are you maximising the revenue streams your charity relies on and engaging with donors? Have you identified where you could attract donors? How heavily are you relying on unstable, short-term, or one-off income streams and is there an opportunity to explore other avenues? Sustainability is the name of the game.
• Have you considered flexibility in your financial plans should unexpected expenditure arise? Financial reserves are crucial. They afford breathing room when the unexpected strikes, providing that financial backbone to support the charity. Undoubtedly, this is needed for many charities more than ever.
• Have you considered what other funding is available? It’s important to consider opportunities to pursue grants, reach out to impact investors, crowdfunding within the community, or hosting an auction evening with the local community. Explore funding options and alternatives and develop that financial resilience. The Commission has also published useful guidance for charity trustees, including the management of money, assets and property, looking to improve charity finances and guidance on merging charities. The Cabinet Office also has a useful tool to support organisations with finding government grants.

We support charities and trustees with strengthening their governance. For any questions about governance, please contact Edwina Turner.

Are you in control? The Commission launches its latest inquiry

Whilst we are on the topic of money, when did you last consider your financial policies and procedures? Charities should ensure their annual reports are up-to-date; staying on top of their financial controls is vital for the safe and effective governance of the charity.

It is the approach to these questions that has led the Commission to recently launch a new inquiry into the Hussaini Charitable Trust. Charity trustees must ensure they have and monitor financial procedures and fulfil their reporting requirements.

The Commission’s investigation was instigated after the charity failed to submit its accounts and from there ensued the findings that connected persons had been paid from charity funds.

Remember, it is essential for trustees to:

• Be aware of their legal duties and act accordingly – they apply to all charities and their trustees and cannot be delegated to others. Training, appraisals, monitoring and up-to-date policies are key to staying on track.
• Have financial controls in place – review policies, review procedures. Is everyone acting in accordance with them? Are you documenting your compliance with these practices? Who has access to the charity’s bank accounts? Remember, it is not just a loss to the charity, but public trust and confidence is also on the line when there is poor financial governance.

For further guidance, please contact Catherine Gibbons.

Branching out?

When was the last time you checked the bank accounts of your charity? Have you ever checked how you keep control over them? On the back of considering financial controls, trustees need to ensure they are aware of what is going on with the charity’s bank accounts. It is not unusual for charities to find there may only be one person in control and even persons who are no longer at the charity.

However, this is not just a problem for smaller charities. Larger charities and those who continue to grow need to be vigilant and the conclusion of the Commission’s investigation into Mountain of Fire and Miracles Ministries International is a cautionary tale.

The Commission found the charity did not have appropriate controls or policies in place to reflect its size and structure. Amongst other issues, there were over 100 bank accounts for the different branches, which were managed centrally. With such a large number of accounts, it was unclear what funds were being held for and the Commission identified a risk of mismanagement or misapplication.

So, what can trustees take away from the Commission’s findings?

• Review your financial polices and controls – just because something works now, does not mean it will work in the future. As your charity grows and changes, trustees need to ensure they consider whether their financial governance is still fit for purpose. Question how you can ensure you know what donations are for and where they have come from.
• Conflict, conflict, conflict – as charities grow, potential conflicts may become less easy to spot – perhaps the number of trustees has increased and conflicts are appearing in places they never used to. Charities need to ensure their oversight and reporting policies and procedures remain suitable; they are under a duty to manage and declare conflicts.
• The left hand does not know what the right hand is doing – perhaps, as your charity has grown, you have partnered with other charities or created branches. Is the administration governed centrally by you or locally by those branches or partners? Do you know what is going on across the charity? How are things reported and are polices being followed? Trustees must ensure oversight exists and review how policies and procedures are being implemented. The Commission’s investigation is a reminder that how your policies function in reality is essential for good governance.

If you have any concerns or queries about your charity’s approach to governance, or are looking for further guidance, please contact Sarah Tomlinson.

Spotlight on the register of mergers

Legacies are often a key source of funding for charities. However, have you considered what happens if your charity no longer exists? Perhaps you are looking to incorporate your unincorporated charity or merge with another?

Enter the Commission’s register of mergers. The register tracks when one charitable entity ceases to exist by way of transferring its assets or merging with another charitable entity. By appearing on the register, most legacy gifts to the charity that no longer exists will be passed to the charity it merged with/transferred its assets to, meaning that a vital source of funds is not lost. The Commission has issued guidance on the register of mergers. You can only register a merger where:

• all your charity’s assets have transferred to the charity you are merging with; and
  • your charity has closed or will close because of the transfer of assets; or
  • your charity has not been fully closed because it has a permanent endowment not being transferred.

There has been a recent case, British Camelids Limited v Brooke Hospital for Animals and Others (2025), where there were several legacies left to charities which had ceased to exist, whether altogether or because they had incorporated. The case highlights the importance of ensuring there is a means to trace what has happened to a charity in the event it merges or closes, not least to avoid the nightmare of court action.

If you are considering incorporating or merging your charity, or perhaps are looking for advice on the register of mergers, please get in touch with Esther Campsall.

Remember, remember, the 18th of November: Companies House identity verification comes into force

The Companies House changes requiring new and current directors and Persons with Significant Control (PSCs) to verify their identity have been causing a few fireworks.

We recently discussed this in our September newsletter and our corporate team recently hosted a webinar discussing the requirements in greater detail.

In case you missed it, from 18 November 2025, all new and existing company directors and PSCs will be required to verify their identities with Companies House via the GOV.UK One Login platform free of charge. Existing directors and PSCs can voluntarily verify their identity with Companies House ahead of this date.

Once the director/PSC has verified their identity, they should receive a unique code which they can use to verify their identity for any other entity on Companies House where they are on the register.

If you have any questions about the upcoming Companies House changes, please get in touch with Abbey Jones or Katie Crosbie.

The Government’s consultation response: Social housing

Social housing reforms are on the horizon and one such change is the Social Tenant (Access to Information) Requirements. The Government has now published its response to the consultation on its proposed policy statement, which has resulted in two confirmations:

• all private registered providers of social housing will need to publish management information from 1 October 2026; and
• an access to information scheme for tenants and their representatives will need to be in place from 1 April 2027.

Whilst this may seem a long time away, it will be here before you know it. Providers of social housing should prepare for change sooner rather than later. Ben Pumphrey, head of data governance, recently wrote about the Government’s consultation response.

Data is everywhere and ensuring you have the appropriate policies and practices in place is non-negotiable for effective data governance. If you have any questions about data governance, please contact Ben Pumphrey.

Employment update

The Employment Rights Bill continues to bring changes. Anna Dabek and Libby Hubbard, in our employment and pensions team, discuss the Government’s consultation paper on the Fair Pay Agreement for adult social care in England in their joint blog post.

Libby has also prepared an update on the movement of the Employment Rights Bill through the Houses of Parliament and the rejection of the House of Lords’ changes.

If you’re not already subscribed to our Employment Rights Bill Hub, you can do so here. For more specific advice on any of these changes or training for your organisation, please contact Anna Dabek.

For more information

For more information or advice on the topics covered in this month’s newsletter, please get in touch with Edwina Turner, your editor for this month.

I am a legal director and I lead the charity governance team. I have extensive experience advising national and international charities on governance, restructures and mergers. I work closely with boards and chief executives to guide them through challenging changes, aiming to make the process as smooth and positive as possible. I am also appointed by the Commission as an interim manager of charities who are the subject of a statutory inquiry.