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A 2026 outlook assessing how the Gulf crisis may affect UK charities, covering the impact on income, demand for services and costs, based on Charity Excellence’s ongoing sector analysis. This report was last updated 4 April 2026, with OECD data.
Outlined below is a summary of our Fundraising Trends 2026, then our overall assessment of the impact of the Gulf Conflict and, below that how it'll impact both charities and families.
With the risks to the PM and wins by Reform and the Greens, there is now significant UK political instability. This significantly increases the risk of a charity sector crisis. Key risk to look out for:
Either of those or those combined might precipitate:
That's a pretty toxic cocktail of risk. The risk of a further charity sector crisis in the Autumn is now very high.
Since 2020 the charity sector has been in a near‑continuous state of crisis, moving from Covid to the cost‑of‑living shock and then into a period of prolonged fragility, with each recovery taking longer and proving weaker than the last. Our long‑running fundraising data shows that, unlike Covid and the Cost of Living crises, this time fundraising resilience did not fully recover to previous levels, leaving many charities structurally weaker and less able to absorb further shocks.
Even before the current Gulf crisis, the risk of a further sector crisis was already high.
This was driven by weak economic conditions, huge fundraising competition, rising costs and the enduring impact of previous Government funding cuts.
If the Gulf conflict persists or escalates further, charities will face a triple blow of weaker real-term income, higher demand for services, and rising operating costs.
Confidence in this is assessed as high/medium because the direction of travel is clear, whilst energy price, inflation and confidence shocks, and the scale and duration remain uncertain.
In light of this, we believe that, if the conflict continues for a significant period of time:
The conflict is beginning to have a real and growing impact on an already fragile sector.
Whether that plunges us into a further, deeper and longer crisis than ever before, depends on whether, or not, the current conflict escalates and how long it lasts.
The OECD (Economic Outlook, Interim Report, March 2026) has warned that the UK will be hit harder than any other major economy, cutting its 2026 GDP growth forecast to around 0.5%, while inflation is expected to rise to about 4%, reflecting the UK’s high exposure to imported energy and higher debt‑interest costs.
The impact is already being felt but, if energy costs remain high, by mid-year, the UK might be on the cusp of a recession.
The full force would be felt by charities and families, when the Autumn brings shorter daylight hours and colder weather.
The UK Giving Report 2026 (published March 2026 by CAF) includes that we donated £14bn in 2025, compared to £15.4bn in 2024. This is the first fall since 2021, which they attributed to lower average donations, more people cancelling transactions and many not being able to afford giving to charity.
Falling consumer confidence and higher essential costs will reduce disposable income available for giving, which is likely to put further downward pressure on giving by the public.
The conflict has pushed up energy prices and the UK economy is likely to suffer - with a medium‑to‑high risk, because higher energy prices feed through quickly into inflation, confidence, and spending. With the exception of legacies and retail, almost all fundraising income is impacted by an economic downturn. This may well be exacerbated to so0me extent by related factors:
Rising debt servicing costs and pressure for household support may well crowd out other spending. There may also be pressure to increase defence spending. That will increase the risk of additional real‑term cuts to Departmental budgets, which would almost certainly passed on to charity contracts and grants. Government funding is the 2nd largest income source and is particularly important. Fundraising tends to recover with the economy buts below inflation rate funding uplifts to contracts and cuts to grant funding tend not too. We think this is primarily why fundraising resilience has failed to recover since the £1bn funding cuts by the Government in mid 2023. This is what caused the last crash for the sector.
Confidence: Medium. The fiscal pressure is clear but we don't know how bad it'll be or what specific spending decisions might be made in light of this.
Our trends report analysis found that demand surged hugely in response to the Cost of Living Crisis before falling back a bit, as the crisis waned, but remaining far above the historical norm. We had hoped that demand would continue to fall in light of the anti-poverty measures announced in the Autumn Statement.
However, energy price shocks and inflation will impact everyone and these disproportionately affect low‑income households. Demand for charity services is likely to increase, particularly for those working in poverty related areas, such as food banks and advice, as higher energy and living costs feed through to households. Those working in the region and with its communities are also likely to experience even greater demand for services.
This will increase workload on already badly overstretched services.
Charity operating costs are likely to rise again. Those able to meet the rise in demand will incur additional costs in doing so and, overall costs will increase for everyone. The impact on increasing temperatures and longer daylight hours, will mitigate the impact of growing energy costs, until the autumn.
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Council tax, water, broadband/mobile phone costs are rising in April. The Gulf crisis is already driving petrol price increases but we estimate it’ll be 1 to 3 months until we feel the full impact. Food prices will rise more slowly but more stubbornly. As we move into mid‑year, imported goods—electronics, clothing, household items—are likely to become a bit more expensive. Energy bills are falling at the moment and the impact of the crisis on these will be mitigated as we move into summer. However, it will begin to really bite with the shorter daylight hours and colder weather in the autumn. Poorer families spend proportionately more of their income on basics, so are likely to feel the impact more and be less able to reduce their outgoings because they have less discretionary spending.
UK is heading for a year of stubbornly higher living costs. If the crisis continues, the autumn could well herald another brutal winter for many on low incomes.
Ethics note: AI was used in researching this analysis under the supervision and control of a human.
