What’s on the horizon for charities in 2025?

It has been a difficult year, with charities struggling to cover the costs of services. The cost-of-living crisis increased the price of energy, staffing, rent, interest rates, and more, while donors have faced a similar financial squeeze, and the demand for services has increased. Leaders have become more reactive to keep charities afloat, while the problems they tackle continue to demand ambition and long-term planning.

 

Under all of this pressure, reaching the full potential of a charity – and of the sector as a whole – can sometimes feel out of reach.

 

But things don’t have to be that way. In 2024, voices in the sector and beyond have spoken out about what needs to change, and the powers of charities to make it happen.

 

In this article, we explore the conditions for charities in 2025, what could change, and how charities can navigate the landscape over the coming year.

 

Skip to: The shifting funding landscape

Skip to: Transforming power dynamics

Skip to: Conquering complexity

 

 

The shifting funding landscape

 

Funding is top of mind for many charities as we enter 2025. And it’s no surprise: the past year has seen a significant increase in demand for charity services, while funding has remained a challenge.

 

In May-June 2024, Charities Aid Foundation (CAF) found that demand had increased for 86% of charities, with 88% of charities expecting demand to continue to rise. Meeting demand was one of the top three challenges facing charity leaders (50%), and those hit hardest are charities working in poverty relief, human rights, equality and diversity, and those helping people in need.

 

Charity finances faced a “triple squeeze” from increasing costs, reduced funding, and higher service demand. Over a quarter (28%) said they were not confident they could meet future demand, and 18% were not confident that they will be around in five years’ time due to an insecure financial future.

 

Due to these resource constraints, charities have been more reactive than strategic. In 2024, charity leaders said they spent most of their time firefighting – that’s an average of at least 75% of their time solving day-to-day problems to keep their charity operating. Charities with annual incomes of under £1 million are most likely to experience this.

 

And more time spent firefighting means less time paying attention to the bigger picture. Research from New Philanthropy Capital (NPC) found that in 2024, charity leaders had fewer conversations about mission, mergers, and partnerships than they did three years prior. Similarly, it contributes to larger problems being put to the side – like paternalism and tackling ineffective systems.

 

 

How resource constraints impact digital in charities

 

Resource constraints play out in a few ways through how charities use digital. First, many charities simply can’t afford the tech needed to achieve their goals. That’s the mission behind the Charity Digital Exchange: to connect charities with discounted and donated tech from some of the world’s leading technology providers.

 

Similarly, resource constraints put pressure on charities’ time, meaning they don’t have enough “headspace” to take a step back and be strategic or innovative in using tech more effectively. In 2024, almost seven out of ten charities (68%) struggled to progress digitally due to their finances, headspace, and capacity.

 

Ethical and cyber security risks can arise where charities don’t pay due attention to their digital operations due to being pushed for time and money.

 

 

What’s on the horizon?

 

Meeting service demand depends on having enough funding – and the right types of funding. Here, we discuss what’s coming up for charity funding in 2025.

 

 

Government funding

 

Charities support the wellbeing of the country, addressing the needs of the people that are not met by other sectors, including delivering public services on behalf of the government.

 

The NCVO warned in March of 2024 that government contracts to charities were not rising in line with inflation or providing surplus to improve support. “Charities are increasingly subsidising public services with voluntary income and reserves. They’re risking their long-term sustainability to meet urgent needs now.”

 

With many charities struggling with finances in 2024, they and the public agree that charities need more government funding in 2025.

 

According to CAF, nearly a third (31%) of charity leaders think the sector is unhealthy in 2024, with charity leaders calling for better overall funding (55%) and improved funding from the government (32%) to improve the sector’s health.

 

Meanwhile, the majority of the public are not sure that charities are working where they’re most needed, and 54% want the government to tackle this issue by giving more support to charities to work in poorer areas, NPC found.

 

According to the NCVO, the government’s 2024 budget will mean new financial pressures on charities due to the rise in the national living wage and drop in the threshold for National Insurance Contributions. The NCVO encourages charities to strengthen the relationship with government by sharing its views through the Civil Society Covenant Framework.

 

The NCVO also observes positive measures in the budget, such as a £240 million investment in local “trailblazer” programmes, £26 million to mental health crisis centres, an over £2 billion investment in health research and development, and others that support legacy giving and public service delivery.

 

 

Public donations

 

Aside from government funding, charities also consider donations from the public to be very important to meeting service demand and achieving their missions.

 

Going forward, there are opportunities for more donations from wealthy individuals, from those in more affluent areas in the south of the country, and from the public in general, as CAF highlights.  

 

The infrastructure charity says, “The median donation to charity has remained static at £20 for the last seven years, and the number of donors has not increased. Charities are reliant on a smaller cadre of generous donors, and it appears we are getting out of the habit of giving as a nation.”

 

According to CAF’s World Giving Index 2024, generosity in the UK has been trending downward for the past decade, and the UK has fallen out of the top 20 most generous countries for the second time, now placing at number 22.

 

But in the shorter term, the picture is optimistic. Enthuse’s Donor Pulse Report 2024 found that three quarters (75%) of the public had given to charity in the last three months: the highest number since 2022 and a significant increase on the prior 12 months.

 

For charities, a focus on awakening those who do not yet give to charity could lead to longer-term sustainability for the sector. More broadly, the data suggests that a culture shift is needed among the UK public.

 

 

Building resilience

 

Building resilience is a way for charities to meet service delivery demands while facing resource constraints.

 

“Organisational resiliency” is a term used by the USA non-profit Black Equity Collective, defined as “an organisation’s ability to pursue its mission from a position of strength and adapt through socioeconomic and political uncertainty”.

 

Charities can develop their resilience by being clear on their purpose and its limits; maintaining awareness of the political, economic, local, and national context; practicing effective leadership with emphasis on talking about the bigger picture; and gaining support from and working in partnership with others.

 

The ecosystem of charities relies on the conditions created by government and funders. This includes things like the strength of the economy, sufficient unrestricted funding, and the ability to partner with government and take political action.

 

 

Transforming power dynamics

 

Amid the immediate financial pressures charities face, an existential evaluation about the role of charity today is also coming to the fore. Charities’ paternalistic approach to delivering services is a major part of this.

 

Paternalism is “an attitude or policy that overrides a person’s own wishes in pursuit of their best interests”. It involves a person or group of people assuming authority over other people and making decisions for them that, well-intentioned or not, prevent them from having autonomy in their lives. It goes all the way back to the power dynamics formed in the colonial origins of charity work.

 

Paternalistic approaches to charity work create the environment for abuses of power. They can also mean that people experiencing inequality or marginalisation continue to do so through the systems charities use to operate. Rather than give service users autonomy over the charity’s work and how it’s represented, charities often make these key decisions themselves.

 

Using one example, most charities are not led by the people they say they serve. The Charity Digital Skills Report 2024 found that just 37% of charities are co-designing their services with users. That means decision-making is shared equally in service design, but not in the conception or delivery of services.

 

Most charities are involving service users, but to a lesser degree. In 2023, research found that 85% of charities consulted with their users and 62% said that users had a direct input into their strategy.

 

Only 41% of the public believe that charities are working in the geographic areas where need is greatest, compared to 83% of charity leaders. This indicates a gulf in understanding between charity leaders’ perspective and the UK public’s experience when it comes to the effectiveness of charity work.

 

It’s worth noting that members of the public from lower income backgrounds were less sure that charities are working where they’re most needed. Meanwhile, 2024 research by Reclaim found that working-class people are hidden or missing in some of the most influential anti-poverty charities in the UK, with 94% of respondents saying class diversity is a problem.

 

 

How power dynamics can influence how charities use digital

 

Digital technology can be a tool for exerting power over others, whether intentional or not. Digital tools, such as artificial intelligence (AI), could be used to gloss over decisions that should be made by service users. Digital tools might also detach charity workers from the people using the charity’s services – reducing time interacting face-to-face for example, or making it easy to take actions that impact other peoples’ lives without involving them.

 

 

What’s on the horizon?

 

 

Dynamic accountability

 

The “top down” funding environment of the charity sector in 2024 creates power imbalances, with funders asking charities to be transparent, report on impact, and prove themselves worthy of support. This results in charities orienting their work towards the funders’ requests, rather than the needs of those they are supposed to be serving.

 

What’s needed is a system of dynamic accountability, says Chilande Kuloba-Warria, founder and director of the Warande Advisory Centre. That means charities and funders having a more equitable partnership, where each is accountable to the other. 

 

Third Sector’s podcast ‘The End of Charity: Power in the wrong hands’ explores how this can be achieved by involving those who have lived experience of the problems trying to be tackled on every level of funding and charity operations.

 

 

Coproduction

 

Coproduction is where an equal partnership is formed between people who use services, those that support them, and professionals in order to work towards shared goals. It can help organisations be part of more effective and empowering solutions. In charity services, it means decision-making is shared throughout the conception, design, and delivery of services.

 

Fundamentally, it means sharing power with the people who use the charity’s services.

 

On a practical level, coproduction enables charities to deliver services that are more suited to the actual problems service users experience. “Lived expertise” is a type of insight that, combined with data and professional expertise, can help charities to meaningfully challenge harmful systems, as is found by financial security charity Turn2Us.

 

In some cases, as described by the charity Homeless Link, coproduction can help people who are experiencing challenges in their lives to develop confidence and skills to fully participate in tackling those challenges. And as mental health charity Mind notes, “it can be an extremely effective way for people with lived experience to be able to influence change”.

 

Charity staff should be involved in the coproduction process, says Homeless Link, not just managers and trustees.

 

It is important to value the involvement of those your charity is supposed to be serving. A genuinely equal and reciprocal relationship is needed between staff and people with lived experience, and you must recognise that all contributions are valuable, says Mind.

 

In the same way, beware of tokenism. One person can’t speak for a whole community of people, and no one lived experience is universal.

 

 

Developing a shared understanding

 

In 2024, the conversation around transforming paternalism in the charity sector is ongoing. In order to change how charities interact with the people who use services, everyone in the sector needs to be prepared to learn and take meaningful action.

 

To learn more about the issues involved, here are some resources:

• Charity So White
• JMB Consulting
• Missing Experts Report
• Paternalism to empowerment: all in the eye of the beholder?
• Paternalistic AI: the case of aged care
• Paternalistic and ‘othering’ language in the charity sector
• The danger of a single story
• The End of Charity Podcast
• The Master’s Tools Will Never Dismantle the Master’s House
• The NGO Halo Effect: How Moral Goodness can Explain Unethical Behaviour
• The people in the pictures

 

 

Conquering complexity

 

We live in an interconnected world, involving dynamic systems that are always changing, interacting, and influencing each other. And for charities trying to tend to the problems of the world, this complexity can be a challenge – particularly when there is insufficient time and resources to reckon with it all.

 

For example, our 2024 research into the state of digital inclusion in the UK charity sector found that complexity was a key challenge for charities when it comes to digital inclusion. Respondents to our survey engaged with a variety of service users, volunteers, and employees, all with different levels of digital skills and confidence, different digital preferences, and access to different devices.

 

This meant that they had to manage stakeholders with a range of digital challenges, and the challenges were complicated even further when combined. Therefore, we found that there is no one-size-fits-all approach to including everyone digitally, which poses a particular challenge to charities when facing a lack of funding and time.

 

When working towards social change and pushing against the status quo, complexity can particularly be a challenge. There may be a lack of information to work with, and therefore a lack of clarity. Meanwhile, deeply entrenched and interconnected problems can take skill and strategy to unpick.

 

Complexity can pose a challenge to charities on any scale, whether it’s one small team managing a diverse and chaotic workload, or a nationwide system involving thousands of people, all with their own roles and agendas.

 

 

How complexity influences how charities use digital

 

Digital technologies can support collaboration and therefore help tackle complex systems through the ability to meet across large distances, visualise systems, be agile through instant messaging and email, conduct research online, and so on.

 

However, charities can find digital itself too complex, needing more “headspace” to progress digitally.

 

Charity workers can see AI as a way to reduce complexity in the workplace – by summarising information, for example – but in doing so risk a loss of nuance when dealing with complex topics and situations.

 

 

What’s on the horizon?

 

 

Clarifying processes

 

To reduce complexity, there are a number of ways for charities to gain clarity over the systems they are working in and trying to influence.

 

Involving a broad range of service users about their experiences can provide clarity over what is and isn’t working in a system, revealing key problems that are not obvious to those delivering services themselves.

 

To clarify the systems of which they are part, charities may benefit from mapping strategies. Systems mapping can help simplify systems to their key aspects and processes. It can also help to define the boundary of a particular system, identifying root causes and seeing where action can be taken to make the biggest difference.

 

In understanding systems, an open mind is needed, says NPC. As well as searching for potential allies, it’s important to be aware of potential blockers of change and understand why all parties behave in the ways they do. Having empathy and understanding over why poor decisions are sometimes made can help you intervene in the system more effectively.

 

Remaining clear on the charity’s route to its mission is another way to reduce complexity. With charities facing many pressures to stay afloat, they may inadvertently compromise when responding to commissioning and grant funding opportunities – and NPC warns that charities can “drift away from their mission unless care is taken”.

 

They state, “Charities owe it to their beneficiaries to regularly and seriously challenge themselves on what it would take to achieve their mission and compare this to the services they provide. Returning to first principles may sometimes be an uncomfortable process, but it is essential.”

 

 

Creating a learning culture

 

To handle the complexity of today’s problems, charity teams need to foster the right conditions. Enter the learning culture.

 

NPC defines the learning culture: it means charity team members being able to generate ideas, experiment, and problem-solve at all levels of the organisation. It means time and space to reflect on what they are learning and how they need to adapt. It means being open to what others are doing in the external world. And it means actually adapting the charity’s work to what is learnt, on whatever scale is needed.

 

It may seem counterintuitive, but a learning culture can actually save resources by enabling teams to move away from inefficiencies, adapt more quickly to shifting landscapes, and learn from proven approaches rather going down a less effective path due to a lack of information.

 

Charities may enable different teams to learn from each other by breaking down internal silos. This could involve something as simple as a new regular meeting or Teams chat to regularly share ideas and learnings across teams.

 

People should be able to learn at all levels of the organisation. This can look like receiving timely, actionable feedback, opportunities for collaboration, and support to action learnings.

 

 

Collaboration between charities

 

In the parable of ‘The Blind Men and an Elephant’, every person can only see one small part of the bigger picture. That’s one reason why collaboration can be helpful to making substantial change in complex systems: making the most of different areas of knowledge and experience around a single cause.

 

Collaboration between charities can be the best way forward to benefit service users. It can mean combining networks, resources, and skills to reach a common goal. This is an efficient way of working, ensuring that efforts aren’t duplicated across organisations, and benefiting from economies of scale to streamline spending. It can free up more money to directly benefit service users and the mission. Collaboration between charities can also provide more coherent pathways for service users through multiple services.

 

It is important for charities to resist the competitive mindset encouraged by today’s financial conditions and recognise the strength in partnership. This was emphasised by panellists of our Digital Fundraising Summit panel session ‘Champion your cause: Maximising your impact through collaboration.’

 

To work with charities that have a competitive or protectionist mindset, Alice Corrigan, Trustee and Fundraising Advisor at the Pachamama Project recommended demonstrating how collaboration would be mutually beneficial, explaining the tangible benefits of working with your charity. Andrea Johnson, Executive Director of Green Empowerment, added that creating a personal connection with the charity with an introduction through your board of directors can also be helpful.

 

To collaborate meaningfully with other charities, a few key ingredients are needed. The needs of beneficiaries must be at the core of charity collaborations, and charities should ensure trust, integrity, and clearly aligned visions and values between organisations.

 

Charities can collaborate with each other by forming strategic alliances, partnerships, and networks around causes in common, as well as signposting to each other’s services. They can combine efforts on marketing and fundraising. And they can use their collective voice to represent and advocate for service users.

 

 

Collaboration with government

 

Bringing in their different capabilities and expertise, charities and the government can achieve great things together.

 

Charities can bring their vital knowledge to benefit policymaking and service design, raising the voices of the people most affected by changes. Meanwhile, the government can create large-scale solutions to the country’s biggest problems that charities are tackling on the ground, like poverty, inequality, the weakening of human rights, and climate change.

 

ACEVO and the NCVO highlight that government can also help people in the UK live healthier, happier, more fulfilling lives by enabling high quality, joined up public services that meet their needs, no matter where they live or their background. This approach can prevent people reaching crisis point and lessen the strain on charities later down the line.

 

In 2024, nearly four in five (79%) charity leaders think that charities should have a political voice on issues that concern them, according to CAF. And over three in five (62%) would like to do more work to develop policy. The vast majority of the public think it’s important for government, businesses, charities, and philanthropists to work together to deliver projects nationally (84%) and locally (85%).

 

The 2024 government has promised to reset the relationship between civil society and government. The NCVO, ACEVO, and charities from across the country have created a voluntary sector manifesto on the ways the new government can work with charities to make a positive difference.

 

For charities looking to work with policymakers, Pro Bono Economics has saved you some time on research by creating a free resource detailing MP’s backgrounds working and volunteering in the charity sector.