Charity Commission warns of fraud and oversight gaps

If you give to charity, volunteer, or sit on a trustee board, this report is worth your time. In its second annual Charity Sector Risk Assessment, the Charity Commission says charities in England and Wales are facing more complicated attacks from bad actors, with some cases slipping between different regulators rather than landing neatly with one watchdog. That matters because charity status carries trust. When people donate money, send a child to a service, or ask a charity for help, they usually assume someone is checking the basics. The Commission’s warning is a reminder that trust still needs strong checks behind it.

One of the clearest warnings is about charitable status being used for private benefit. Put simply, that means people trying to use the legal badge and public goodwill of a charity to help themselves rather than the public. The Commission says concerns in this area rose by 29 per cent in 2025-26 to 374 cases, after a 38 per cent rise in 2024-25 to 291 cases, up from 211 in 2023-24. That is not a one-off spike. It is a steady climb, and it tells us the regulator is seeing the same problem return in larger numbers.

The report also says casework is getting harder because some charities operate where more than one regulator may be involved, or where the dividing lines are not clear. Over the last year, the Charity Commission formally passed information to other bodies, including HMRC, the police and local authorities, 500 times. That was up 8 per cent on the previous 12 months. **What this means:** when a problem touches money, safeguarding, housing, education or tax at the same time, there may not be one expert body following it from start to finish. The Commission can act on charity law, governance and trustee duties, but it does not have the powers or staff to judge whether every service is good enough in practice.

That gap is especially worrying for charities working with vulnerable people. Some services are covered by subject specialists, such as Ofsted for education and the Care Quality Commission for care services. But the Commission says some out-of-school settings and some housing services fall into areas where users may have little chance of redress if standards are poor. For readers, this is the uncomfortable part. A charity can be legally registered and still sit in a weakly checked corner of public life. For trustees, the message is plainer still: if you are starting a new service or partnership, due diligence is not paperwork for its own sake; it is part of keeping people safe.

The financial picture is slightly better than it was, but only slightly. The Commission says there are early signs of recovery because sector income has edged up a little faster than total spending. Even so, the recovery is uneven and many charities, especially smaller ones, are still operating with very little room for error. Two in five charities spent more than they brought in, and one in four charities with incomes below £10,000 said they were only just breaking even in 2024. When money is that tight, every surprise bill, delayed grant or failed fundraiser can have knock-on effects for staffing, planning and service quality.

The report also points to faster-moving fraud risks linked to new technology. The Commission says artificial intelligence is helping some bad actors put together fraudulent applications to register a charity or apply for grants, which is one reason checks at the front door matter more than ever. Its figures show how cautious the regulator has become. Only 45 per cent of applications now end in a new charity being registered, compared with 72 per cent in 2016-17. That does not mean every rejected application was dishonest, but it does show a much tougher screening process in response to a more difficult threat. The report also backs calls from the National Lead Police Force for Fraud for policing and intelligence work to keep pace with the huge rise in reported fraud in England and Wales.

Safeguarding remains a major part of the Commission’s caseload. Around a quarter of concerns raised with the regulator over recent years have related to safeguarding, and the report gives special attention to allegations involving people in positions of power or influence, including spiritual influence. The assessment also returns to governance weaknesses, social tensions and international conflict as live risks for charities. It notes more casework linked to allegations of extremism or charities acting outside their stated purposes, especially in the context of the Israel-Palestine conflict. That is a reminder that charities do not sit outside society’s pressures; they feel them sharply.

Paul Latham, the Commission’s director of communication and policy, says most charities are well run and make a real difference every day. The report is not arguing that the sector is broken. It is saying the risks are becoming more complicated, the gaps between watchdogs are still real, and the damage from a small number of bad cases can be serious for public trust. The assessment draws on charity accounts, trustee annual reports, serious incident reports, investigations and intelligence from other public bodies. The Commission says trustees should use it when reviewing risk registers, finances, safeguarding plans and new delivery arrangements. For the rest of us, the lesson is simple: charity oversight is not just about catching wrongdoing after the fact. It is also about making sure the rules, the checks and the support around trustees are strong enough before harm happens.