Kreston UK Charities Report 2025

With the 2025 Spring Statement bringing welfare reforms and increases to the National Minimum Wage and Employer National Insurance, charities up and down the UK are facing significant challenges. 

These recent changes have increased the demand for many charities’ services at the same time as increasing their outgoings, so it’s no surprise that many are uncertain about their financial outlook for 2025. 

As members of the Kreston Global network of accountants, and part of the Kreston UK Charity Group, we’re able to gain valuable insights into these financial outlooks and challenges for the third sector.

The Charities Report 2025 allows us to understand the experiences of a variety of charities across the UK, which in turn can provide important guidance on how the sector can adapt and grow. 

Mixed financial outlooks for 2025

In line with the uncertain economic times, the report shows that charities are uncertain about their economic outlooks for 2025 - with 41% having a neutral outlook, 32% having a negative outlook and 27% having a positive outlook. 

There are many financial challenges for the sector, including rising costs, with 95% of charities surveyed having seen at least one cost increase in the last 12 months. Of those that responded, 92% have seen wages increase, 61% have seen energy prices increase and 69% have seen insurance prices increase. 

In addition, the majority of charities (80%) are experiencing pressures on their income streams and, as a result, 63% are exploring options to diversify their income streams. This includes growing major donors, grants, trusts and foundations, legacies and corporate giving. 

With this in mind, it’s no surprise that charities see reduced funding as the biggest emerging risk in 2025 - closely followed by increased demand, staffing pressure and new rules/regulations.

Changing political opinions

According to the report, it appears that many charities are losing trust in the Labour government, with 81% feeling that the new government will have a negative impact on their charity. 

This is surprising considering that last year, 59% of charities believed that Labour would have the greatest positive impact if they came into power - which they did.

Mike Bath, Partner at James Cowper Kreston, says: “Labour administrations have traditionally had ‘social’ spending as a high priority which has historically benefitted the sector. This administration’s priorities - for the moment - appear quite different.”

Charities show resilience

Despite the many financial challenges being faced by charities in 2025, it’s positive to see that the majority of charities (85%) still believe they have the capacity to deliver their required services this year. 

This demonstrates the resilience of the sector, but it remains to be seen whether this will continue once the full effects of recent Government changes are felt.

To read the report in full, please click here. 

If you wish to discuss this in further detail, please contact one of our Charities experts by clicking here.