An increasing number of “bad actors” are taking advantage of charities for private benefit and, in some cases, attempting to intentionally set up charities for this purpose, a new report from the Charity Commission has warned.
The regulator’s second annual Charity Sector Risk Assessment reported a “sustained upward trend” in the number of cases relating to charitable status being abused for private benefit in recent years.
It found a 38 per cent increase in such cases (from 211 to 291) between 2024 and 2025, and a further 29 per cent increase in 2025-26 (374 cases).
The commission warned that new technologies, including the use of AI in charity registration applications, increased the risk of bad actors “exploiting the system and seeking to use charities as a vehicle for private benefit”.
The report also highlighted “potentially organised misuse of charities” through financial transaction methods such as voucher schemes, which it said can involve weaknesses including reduced transparency.
The regulator said that while the numbers of cases were relatively small, “the level of charitable funds at risk could be significant and the impact on public trust and confidence considerable”.
The report also flagged an increase in “particularly complex casework” being handled by the regulator, including some allegations of “significant fraud”.
The commission made almost 500 disclosures of information to external agencies including the police, local authorities and HMRC during 2025-26, an 8 per cent rise on the previous year.
The report warned that where charity services, such as social housing, are overseen by more than one regulator, “a lack of clear regulatory delineation may present risks for both those receiving services and the opportunity for abuse by those with malign intent”.
The report provides guidance for trustees on mitigating the risk to their organisations, such as making regular reviews of financial and asset transactions, including payments from charity bank accounts, and undertaking due diligence before entering new service delivery agreements.
Commenting on the findings, Paul Latham, director of communications and policy at the Charity Commission, said: “The vast majority of charities are well run, making a positive difference to lives and communities every day.
“However, our assessment highlights the growing scale and complexity of risks they face, including from those seeking to exploit charity status for personal benefit, and from a lack of regulatory clarity which potentially leaves service users exposed to poor services or harm.”
He added: “While proportionally relatively few charities are directly affected by such threats, their impact can be significant, for the individual charities, the commission’s resources and public trust and confidence in charities.”