Report

Charity sector development report 2025

10 Apr 20252 min read

Financial sustainability, modern ways of fundraising, and diversification of revenue are key themes for not-for-profit organisations in the months ahead. This year’s edition of our charity sector development report explains how they can navigate a landscape where they’re asked to do more with less.

Our annual report outlines how not-for-profit organisations can manage risks and take opportunities in an environment where costs are no longer fully covered by grants and contracts. In 2025 our usual guidance on sector risks, financial reporting, and regulatory updates is supplemented by insight on what current hot topics mean for charities:

Artificial intelligence
Diversity of revenue streams
Challenges facing trustee boards, and good governance practices
Revisions to Companies Act thresholds and the Economic Crime and Corporate Transparency Act
Fundraising disclosures
Defined benefit pension surpluses

Our VAT team also shares their views on recent changes to indirect tax and the outcomes of cases affecting charities, and we suggest how to mitigate the cost of changes to employers’ National Insurance Contributions and the National Minimum Wage.

FRS 102 revisions

The Financial Reporting Council published its revisions to FRS 102 at the end of March 2024, and the Charity SORP (Statement of Recommended Practice) consultation launched at the end of March 2025 for a 12-week period. These updated frameworks are applicable to accounting periods beginning on or after 1 January 2026. The main changes are a new five-step model for revenue recognition, and the introduction of all leases onto the balance sheet (with exceptions for short term and low-value leases).