Watch our Video
This web page summarises our recent research into the need for and challenges facing small charities, as part of our ongoing work to champion and support them. We have carried this out, partly to give them data to help strengthen funding applications but also because we have been slowly building a new support system over the last 2 years. Everything we do is led by what you want from us so, as we now move into the detailed design stage, we need you to tell me what it is you need. We have 2 surveys - one for small charities and the other for infrastructure bodies and charity networks, including informal ones. Everyone is important and everyone's voice matters.
Small Charity Survey (very short!)
Infrastructure Body and Charity Networks Survey.
Both will close in the next week or so - please complete these now. If you include your e mail address, we'll send you the results and you'll be amongst the first to hear about the launch plans for our new service. Out planned launch date for Phase 1 is the autumn and Phase 2 early 2027.
The UK charity sector has not experienced stability since early 2020. Instead, it has faced a sequence of overlapping crises that have progressively weakened resilience, particularly among small and medium‑sized charities.
Following Covid‑19, the cost‑of‑living crisis sharply reduced real‑terms income while increasing demand for charitable services. In autumn 2023, a further sector shock emerged, driven by renewed economic weakness, high inflation, rising operating costs, intensifying competition for donations, and the cumulative impact of long‑term Government funding reductions.
Charity Excellence fundraising analysis shows that each crisis has taken longer to recover from than the last and, critically, that the most recent recovery failed to return to pre‑crisis fundraising levels. For the first time, fundraising resilience did not fully rebound, leaving many charities structurally weaker, with diminished reserves and limited capacity to absorb further shocks. (Source: Charity Excellence, Charity Fundraising Trends.)
Unlike Covid‑19, when emergency funding and exceptional public goodwill temporarily softened the impact, recent shocks have occurred against a backdrop of sustained economic fragility, rising costs, weakened household finances and constrained public spending. More charities are now competing for a smaller pool of discretionary income, while long‑term Government funding reductions have removed key financial buffers. (Source: Charity Excellence, Charity Fundraising Trends.)
Looking ahead, our sector analysis concludes that a meaningful fundraising recovery in the near term is unlikely. There is a high risk of a further sector crisis if global instability — including prolonged conflict in the Gulf — persists. In that scenario, charities face a “triple blow” of weaker real‑terms income, rising demand, and higher operating costs. Charity Excellence analysis indicates that full sector recovery may not occur before 2028, and potentially not at all, under these combined pressures. (Source: Charity Excellence, Gulf Crisis).
The conclusion is unavoidable: there is not enough funding, and there is not going to be. Without systemic change, many charities will be unable to continue to meet need.
The UK charity sector comprises around half a million non‑profits, including approximately 400,000 charities, supported by around one million staff and an estimated 13 million volunteers. (Source: Charity Excellence. How Many Registered Charities are there?) Around 95% are small, often volunteer‑run organisations.
Small charities play a distinctive and irreplaceable role. The Value of Small report demonstrated that they act as first responders, fill gaps in statutory provision, and reach people whom larger charities and public services often do not. Their strength lies in trusted relationships, local knowledge, flexibility and person‑centred support — not scale. (Source: Lloyds Bank Foundation, 2018.)
Follow‑up research during Covid‑19 found that small charities “showed up and stuck around”, responding faster and remaining engaged longer than larger systems, particularly for people experiencing homelessness, poor mental health, displacement and multiple disadvantage. Researchers explicitly concluded that this is capacity the system cannot afford to lose. (Source: Sheffield Hallam University / Lloyds Bank Foundation, 2021–22.).
However, Charity Commission data published in 2026 shows a clear structural divide by size. Charities with income below £500,000 are far more likely to operate at a deficit, while larger charities are more likely to report surpluses. Smaller charities are more exposed to inflation, income volatility and rising demand, and are less likely to receive Government funding. (Source: Charity Commission Annual Return Analysis 2024, published March 2026).
Despite delivering high social value relative to cost, small charities are locked into a system that favours scale over impact, leaving them disproportionately vulnerable.
The Local Government Association is explicit that working with local infrastructure organisations is essential, not optional. They enable representative engagement, empower smaller VCSE organisations to overcome capacity barriers, and translate council priorities into effective local action. (Source: Local Government Association, Working with Local Infrastructure Organisations.)
Yet independent analysis shows an increasingly fragile infrastructure ecosystem. The 360Giving Infrastructure Analysis Report identifies around 700 infrastructure bodies, of which the majority are local or regional. Despite this, funding is heavily concentrated: the 20 largest organisations receive 37.5% of all infrastructure spending, while 80% have income below £1 million, and 29% below £100,000. Many of the largest bodies are national and London‑based. (Source: 360Giving, 2023.)
Moreover, over the last 20 years, the number of charities and other non-profits has grown significantly, increasing the need. The numbers of national charity infrastructure bodies has fallen a bit. Those lost include the Small Charities Coalition and the FSI, who supported the small and often very local charities. Charity Excellence is the last of the national bodies that provide broad based support to all UK smalls. Even more worryingly, the number of local bodies has declined significantly.
Local VCSE infrastructure organisations need more than funding alone to be effective. The NAVCA, Walking a Tightrope report highlights the central importance of trust‑based relationships with VCSEs and statutory partners, the challenge of managing capacity and competing expectations, and the need for leadership and connection to sustain credibility and legitimacy in complex local systems. These findings underscore the need for support that strengthens relationships, peer connection and sector-wide capacity, alongside financial resources. (Source: NAVCA, Walking a Tightrope.).
Each closure results in the permanent loss of local knowledge, relationships and institutional memory, weakening the entire sector and making it harder to reach the charities and communities that most need support. Local infrastructure charities need both funding and other support.
