Many of our clients serve as charity trustees, applying their business expertise to meaningful causes while gaining valuable experience in governance and strategy. Serving as a trustee is not only personally fulfilling but also represents an excellent opportunity to broaden professional networks and strengthen board-level skills, particularly in areas like financial oversight and strategic decision-making.
With recent reports from the National Council for Voluntary Organisations (NCVO) indicating that four in five charities have at least one vacant board position, trustees are navigating a complex landscape filled with both challenges and opportunities for growth and impact. Below, we outline some of the key issues in the charity sector and provide practical tips to help trustees and charity leaders address them effectively.
Building sustainability and embracing ESG principles
Sustainability and ESG (Environmental, Social and Governance) are now central to long-term viability in the charity sector. Charities can play a unique role in advancing Net Zero goals by assessing their carbon footprint, setting measurable targets and adopting sustainable practices. Not only do these efforts benefit communities and the environment, but they also appeal to new donors, employees and funders.
Tip
Develop a clear ESG roadmap. Start by evaluating your charity’s current environmental and social impact. Engage donors, volunteers and employees to build support and identify priorities. A robust ESG strategy can help manage risks while opening new opportunities.
As part of our commitment to helping clients prosper, our London office has partnered with ESG specialists Omnevue to offer comprehensive carbon reporting and ESG review services. Please contact London office partner Harriet Hodgson-Grove at h.hodgson-grove@uhy-uk.com for more information.
Adopt AI responsibly
While Artificial Intelligence (AI) may seem daunting, it offers significant potential for charities. From automating routine tasks to enhancing donor interactions, AI can drive efficiency and effectiveness, leading to clearer insights into areas such as funding, spending and improved budget controls. However, it’s essential to approach AI carefully to avoid pitfalls like algorithmic bias or data misuse.
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Start with small AI projects, such as chatbots for common donor queries or tools for managing grant applications. Monitor these tools closely to ensure alignment with your mission and ethical standards.
Enhancing financial resilience and oversight
Trustees play a critical role in sustaining the financial health of a charity and effective financial governance and resilience are essential for long-term success. Regularly reviewing budgets and cash flow as ‘living documents’ supports strategic decision-making. Cloudbased tools, such as Xero, can offer real-time insights and streamline areas such as budgeting, grants and donation management.
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Encourage all trustees to engage with financial data. Regularly update budgets and financial projections to stay responsive to changes. When reviewing finances, consider questions such as: Are income streams and fixed costs clear? Do services align with mission objectives? How is liquidity managed in balance with reserves?
Keep abreast of financial reporting changes
There are several financial reporting changes on the horizon, including a number of amendments to FRS102 (exposure draft FRED 82) and the new Charities SORP. Significant changes include a new revenue recognition model and updated lease accounting rules requiring most leases to appear on balance sheets.
These updates aim to improve financial clarity and accountability but may add complexity, especially for smaller charities. The SORP Committee’s focus is to make the guidance more accessible and proportionate, benefitting trustees, particularly those without formal accounting backgrounds. The proposed changes will become effective for accounting periods commencing on or after 1 January 2026.
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Familiarise yourself with these changes early, consider attending consultations and discuss them with your charity’s adviser to ensure smooth adaptation. If your charity is a UHY client, our team will meet with you well in advance to address any required disclosures.
Craft an impactful trustees’ annual report
The trustees’ annual report is more than compliance; it’s an opportunity to authentically showcase the charity’s objectives, achievements and future goals.
This report should tell an authentic story that ties together the financial statements and narrative elements, providing context on how resources are used to fulfil the charity’s mission. The report should acknowledge not only successes but also challenges and areas for improvement to build trust with supporters. Clear metrics, real-world examples and stories of change show how a charity’s work makes a tangible difference.
Tip
In the financial review, describe income sources, liabilities and how reserves support future plans. Balance transparency about successes and challenges. Use real-life examples to showcase impact and outline plans to address any concerns.
Engage a new generation of supporters
Gen Z, known for its digital fluency and values-driven approach, will become an increasingly important force in philanthropy. Charities need strategies that appeal to this group’s desire for transparency, activism and purpose-driven engagement.
Tip
Focus on purpose and transparency by clearly communicating how donations are used, spotlighting specific projects and sharing regular updates to build trust. Use social media platforms like Instagram and TikTok to share short, authentic stories and behind-the-scenes content that feels relatable and real. Offer ways to engage beyond donations, such as digital campaigns or social media challenges, to resonate with Gen Z values.
Final thoughts
While charities today face complex challenges, they also have unique opportunities for growth and impact. Trustees who prioritise ESG, embrace digital tools and strengthen financial resilience will be well-positioned to make a lasting difference.
The next step
If you would like to discuss your role as a charity trustee or need advice on financial governance, our charity experts are here to help.
Alternatively, if you would like to read more in-depth insights from our charity experts, you can download our 2024/25 Charity & NFP Outlook on our website.
This insight is from our latest issue of Prosper, our bi-annual magazine aimed at businesses and business owners, covering the pertinent issues currently affecting you and your peers.
