A Very Quiet Crisis - Charity Sector Challenges and Closures in the UK
April 2025
Last June I wrote Open All Hours? Charity Closures in the UK 2024 about the concerning number of closures we were starting to see in the charity sector. Inspired by Michael Wilkinson’s recent post , I thought it timely to update the briefing.
Overview
The numerous challenges faced over the past 12 months have further challenged the sector's resilience. With a somewhat relentless pace there seems to be a growing list of overlapping threats, including but not limited to;
The Trump Tornado - the return of the orange one’s administration. His tariffs and significant cuts to USAID are likely to have indirect but notable implications for grant-making in the UK.
Austerity by any other name - An ever growing funding gap in many local councils in the UK.
National Insurance Contributions (NICs) announced in the UK Autumn Budget 2024.
Registered and Removed
At the time of writing, there are approximately 170,800 main charities and 14,000 linked charities in England and Wales.
However, the total number of charities remains uncertain due to unregistered organisations. Estimates suggest there are between 80,000–100,000 unregistered charities in England and Wales, alongside approximately 20,000 organizations with charitable status, such as private schools and museums.
In 2023/24 9,008 applications were submitted to register new charities (56% success rate) and 3,885 charities were removed from the register.
A bite more information here from Civil Society published on 10th April.
The Good Place?
A survey conducted by the Charity Finance Group (CFG) in late 2024 revealed that 80% of charities are exploring cost-cutting measures, including staff reductions, in response to rising expenses such as Employer National Insurance Contributions (ERNICs) and the National Living Wage (NLW). Additionally, nearly 67% of charities reported being likely or very likely to cancel plans for service expansion or hiring new staff due to these financial pressures.
The VCSE Barometer Survey, which tracks trends and challenges in the UK voluntary, community, and social enterprise sector, provides further insight into the sector's struggles. Findings from Wave 9 indicate that while 56% of organisations describe themselves as "stable" but concerned about future pressures, 31% report being "vulnerable" or "struggling,". These challenges are exacerbated by declining success rates for grants and reduced government funding. As a result, 69% of organisations are now relying on reserves to fill funding gaps
The survey also highlights the precariousness of various funding sources. Nearly three-quarters (72%) of respondents rated government grants as moderate or high risk, with similar concerns about trust and foundation grants (73%) and service delivery contracts (63%). Furthermore, 79% believe government grants are unlikely to cover the true cost of delivering services.
Indeed, The List has shown the scale to which grant-making has changed in the UK in just the last year - with a series of high profile pauses and restructures. You can read more ; On Golden Ponds. How are Trusts and Foundations ageing out? What we can learn from The List. August 2024
The financial strain has forced charities to make difficult operational decisions. Over half (55%) expect to implement staff redundancies, while others are cutting non-essential spending (86%), reducing equipment and technology budgets (62%), and freezing recruitment (59%). Reliance on volunteers has surged, with 68% of organisations expecting to depend more on unpaid help due to financial uncertainty—a significant increase from 23%.
Over one in five organisations (22%) plan to adapt their service delivery models by reducing the number of services (42%), cutting free services (45%), or raising prices for remaining services (53%).
Redundancies and Restructuring
In brief, not comprehensive by any stretch, redundancies and restructures have included ;
Guide Dogs confirms 181 staff departures due to redundancies
RNIB is consulting on staff cuts to save £10 million annually. Update RNIB makes over 15% of staff redundant as part of restructure
Hospice UK has highlighted that one in five hospices in the UK have cut or closed their services in the last year or are planning to do so.
Save the Children UK is considering up to 197 staff redundancies to save £6 million annually.
National Trust freeze recruitment due to an anticipated £10 million rise in staff costs.
Domestic abuse charity Vida Sheffield has shut down due to funding cuts.
Stonewall faces potential redundancies for up to half of its staff following USAID funding cuts
English Heritage has proposed 189 redundancies as part of a restructuring plan
Blossom and Bloom, a mother and baby charity which has helped 700 families, including homeless mums and their children, is shutting down because of cuts to its funding.
Major disability charity Scope has announced that it is placing 124 roles at risk of redundancy amid “increased financial pressures”. - See more at: https://www.civilsociety.co.uk/news/charity-puts-124-roles-at-risk-of-redundancy-amid-increased-financial-pressures.html?trk=organization_guest_main-feed-card_feed-article-content#sthash.8aotKQ96.dpuf
Nottingham-based Bridges Community Trust has announced its closure amid financial struggles after “clinging on for years” - See more at: https://www.civilsociety.co.uk/news/nottingham-charity-closes-after-clinging-on-for-years.html?trk=organization_guest_main-feed-card_feed-article-content#sthash.zibOhdsU.dpuf
Spotlight on Zoe’s Place
In October 2024, Zoe’s Place in Liverpool announced that it would be closing at the end of the year. The planned closure would have meant their six-bedroom hospice, art sensory room, soft play area, hydrotherapy pool and outdoor play area and garden would no longer be accessible to the 50 families it supports. It also would have meant 41 members of staff faced losing their jobs.
Shortly after the charity received a £2.5m donation from Liverpool-based retailer Home Bargains and a huge charity appeal ensued. The local community raised more than £6m in a month with Robbie Fowler and John Bishop supporting the campaign.
Just this week another Liverpool based charity, The Brain Charity, launched a fundraising appeal to cover its estimated £35,000 increase in costs per year due to the impending rise in employer national insurance contributions (NICs).
Charity Mergers
In response to financial pressures, mergers within the charity sector have increased significantly:
The Good Merger Index reported a 31% rise in mergers during 2023/24, involving 63 mergers across 131 organisations.
While mergers among smaller organisations also increased, the number was proportionally far less significant than for larger organisations. 65 organisations under £1m were involved in mergers, compared to 59 in 2022-23 and 50 in 2021-22. By contrast, 115 were involved in mergers in 2020-21 and 84 in 2019-20
Mental Health
Fair Collective, in partnership with NCVO and with funding from The Talent Fund, recently published Breaking Point: The Mental Health Crisis in Small Organisation Leadership. The research focused on the mental health of small organisation (majority income under £1 million) leaders in England and was conducted between August and October 2024. Key findings included;
85% of small charity leaders have experienced poor mental health due to their role.
20% reported severe impacts, including burnout, suicidal thoughts, and hospitalisation.
The way forward
The National Council for Voluntary Organisations (NCVO) stated that they are "continuing to call on the government to provide further targeted support for organisations that are struggling to keep up with increased costs." This suggests the government has not provided sufficient support to prevent charity closures amid the cost-of-living crisis.
A report by the Centre for Social Justice urged the next government to reserve a proportion of public funds as grants for grassroots charities, stating that smaller charities account for 97% of charity closures in the last 10 years. It highlighted the widening gap between large and small charities since the pandemic.
You can take part in the VCSE Barometer Survey. It takes 15-20 minutes to complete. It's made up of three sections:
information about your organisation or group,
your experiences in the last three months and your expectations for the coming three,
a topical theme relating to an emerging or current issue.
The survey is open for responses during these periods in 2025:
23 Apr – 14 May (Wave 10)
16 Jul – 06 Aug (Wave 11)
08 Oct – 29 Oct (Wave 12)
Take a look at the brilliant Decelerator programme which supports organisations and individuals to anticipate charity closures, mergers, CEO transitions and programming ends.
‘What if organisational endings weren’t feared but embraced as opportunities for growth, learning, and renewal?’
The Decelerator Hotline offers confidential, free coaching sessions for anyone who thinks the time has come to consider or plan for an ending in their organisation.
There is a library of Decelerator Tools available for free, including Sensing An Ending toolkit, the Considering Closure workbook, the Starter for 10 Guide to planning leadership succession, or Legacy Lessons.
The Decelerator is funded by Paul Hamlyn Foundation, Esmee Fairbairn and Pears Foundation. You can read more here;
Lessons from The Decelerator's Pilot and the Road Ahead.
Pilot Impact Report
This briefing note has been developed with Perplexity alongside an old fashioned dose of trawling through the news archives of Civil Society and following my nose.
With thanks to Frederick Hillinger for the inspiration for the name of the briefing note .
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Further Reading
VCSE Voluntary Sector Barometer
VCSE National Data & Insights Observatory (2024). Treatment for the charity sector’s unhealthy status quo
PolicyBee UK charity and not-for-profit statistics 2025
NCVO (2024). UK Civil Society Almanac 2024.
Charity Excellence Framework Charity Fundraising Trends 2025
1 in 4 councils likely to need emergency government support – LGA survey
Charity Commission for England and Wales Annual Report and Accounts 2023-2024
Thank you Jo, whilst this paints a stark picture - currently I am going through the redundancy process and this helps me to think clearly about the future and the ways in which 'togetherness' within and across the vast sector is so needed - now more than ever - long gone should be the siloed voices and shouting louder than everyone else - 'position over purpose' must be removed from this sector - whilst this will be hard for many, as 'this is the way it is done' mentality kicks in when facing challenges, and we must together embrace a new wave of ethical and conscious sector unity with a Unified Purpose over siloed Positions - I know easy to say, but when the pandemic happened, it was there within communities - so it is possible when crisis hits - we must as a sector be proactive, responsive and not reactive within this transition - together we are stronger.
Thanks Jo - really useful distillation. And great to have the links. Thanks for putting it all together in such a readable way