New research finds that whilst financial sustainability is the biggest pressure facing charities, the human and organisational cost may be underestimated.

Charities risk damaging their ability to deliver long-term impact if their financial decisions come at the expense of people, culture and mission, new research has found.

Whilst financial sustainability is the dominant pressure currently facing charity leaders, a national survey of 72 charities reveals the increasingly difficult balancing act facing charity leaders as they seek to remain financially resilient while continuing to deliver their missions and maintain healthy organisations.

Commissioned by education charity Services For Education, the findings reveal that financial pressures facing charities manifest themselves through funding gaps, contract losses, inflation, National Insurance increases, low reserves, salary pressures, local authority or government changes – and the need to diversify income.

READ THE REPORT HERE

For many charities, these pressures have led directly to restructuring, changes to pension arrangements, delayed pay decisions, reduced delivery, new fundraising approaches, or a re-examination of business models, the report says.

Most respondents said that financial sustainability was attracting most of their leadership attention, scoring 4.58 out of five. Impact/mission delivery followed at 4.04, while organisational culture scored 3.7. When asked which area was currently under the greatest pressure, 40 respondents – more than half – identified financial sustainability.

But the research, contained in the report ‘Leading Through Uncertainty’, suggests that the headline figures tell only part of the story with narrative responses adding important perspective. Culture is often where financial pressure is felt most acutely, through workload, morale, wellbeing, restructuring, and the difficult human consequences of sustainability decisions.

Charity leaders report that financial pressure is frequently being experienced through its consequences for people and organisational culture – including increased workloads, restructuring, difficult salary decisions, reduced staffing, morale, wellbeing and the capacity to maintain services.

The report argues that successful leadership is therefore not about choosing between financial sustainability, impact and culture, but about maintaining a dynamic balance between all three.

The research was instigated by Sharon Bell, Chief Executive of Birmingham-based Services For Education, following discussions with charity leaders at recent Charity Finance Group and ICAEW Charity Community conferences. She said that the relationship between impact, financial resilience and organisational culture emerged as a recurring issue.

“The financial pressures facing charities are very real, but I wanted to understand what happens when those pressures reach the boardroom and start influencing the decisions that determine an organisation’s future,” said Sharon.

“What struck me most from the research is that financial sustainability, impact and culture are not competing priorities. They are interconnected. Financial sustainability enables organisations to deliver their mission; culture enables people to adapt and respond; and impact is ultimately why the organisation exists.

“The danger is that culture can become the hidden casualty of financial pressure. It may not appear to be the biggest problem on ‘the dashboard’, but if people are exhausted, morale is falling and organisational confidence is being eroded, the consequences will eventually affect impact.

“This research is intended to encourage a more honest conversation between trustees, chief executives and their teams about the difficult choices charities are having to make – and how those choices can be made in a way that protects both the organisation and the people it exists to serve.”

The research also identifies evidence of a sector responding proactively rather than simply cutting costs.

Respondents described strengthening governance and financial reporting, improving reserves management, diversifying income, redesigning services, investing in impact measurement, embracing digital transformation and developing new approaches to service delivery. In several cases, financial pressure had acted as a catalyst for innovation rather than simply retrenchment.

Strong governance emerged as a particularly important factor in enabling organisations to manage competing priorities. Respondents highlighted the value of effective trustee oversight, diverse board skills, constructive challenge, succession planning and leadership development.

The report concludes that resilience is not created by financial discipline alone. It depends on the quality of leadership and governance conversations, making trade-offs visible, protecting organisational health and ensuring that mission and beneficiary outcomes remain at the centre of decision-making.

“For charity boards and leadership teams, it poses a fundamental question: when financial pressure increases, are they protecting the organisational culture and capacity that will ultimately determine whether their charity can continue to deliver its mission?” said Sharon.

‘Leading Through Uncertainty: How Charity Leaders Balance Impact, Financial Sustainability and Culture’ is available free at https://www.servicesforeducation.co.uk/wp-content/uploads/2026/10/Sector-leadership-Survey-2026.pdf

Services For Education has an annual income of around £7m and is supported by Arts Council England, charitable donations and its commercial operations.

ENDS

Picture caption: Sharon Bell, Chief Executive, Services For Education

About ‘Leading Through Uncertainty: How Charity Leaders Balance Impact, Financial Sustainability and Culture’

The research was conducted between April and July 2026 and is based on 72 complete survey responses from charity and purpose-led organisations. Free-text responses were analysed anonymously and selectively to illustrate themes rather than represent every respondent’s view. Seventy six percent of respondents were from organisations with annual income below £5 million, while trustees accounted for 28 respondents and CEOs or equivalent roles for a further 22. The organisations represented a range of sectors including education, health, social care, arts and community development.

READ THE REPORT HERE

About Services For Education

Services For Education is an education and training charity based in Birmingham, that brings music and learning to life. The organisation employs around 200 staff who deliver music tuition to children and provide expert training and development to teaching and school support staff. It works with more than 90% of Birmingham schools and has an annual income of £7.1m (2024/2025). Part-funded by Arts Council England, it also operates its own fundraising and subsidised commercial activities. Services For Education works with more than 90% of Birmingham local authority schools.

Services For Education’s Music Service, teaches music to more than 28,000 children each year, reflecting Birmingham’s diverse population. Twenty-two percent of pupils it teaches have special needs, 35% are eligible for free school meals and more than 40% have English as an additional language.  The Music Service also runs 113 free ensembles and provides more than 18,000 musical instruments free of charge, ensuring that children can access and enjoy making music together. In recent years, to enable children to develop musical skills and experience collaborative music-making, it has expanded its whole-class instrumental teaching. Each year, 12,500 children in Birmingham schools take part.

A highlight of the year is Services For Education’s annual Youth Proms at Symphony Hall that enables nearly 3,000 young musicians from schools throughout Birmingham to perform to an audience of more than 6,000 over four nights. The Music Service also runs music schools, operates a world music department, provides private music tuition for all ages, and works with partners to offer musical and choral opportunities to disadvantaged and vulnerable groups.

Services For Education’s School Support Service delivers expert training and development to teaching and support staff in schools across the West Midlands and increasingly across England.

It helps improve practice and ensures teachers are equipped to respond to changes in curriculum and policy. In 2024/25, 94% of head teachers rated its training as either good or excellent.

The organisation also delivers innovative programmes that support the physical and emotional wellbeing of children and young people through its Health for Life initiative which has been running for more than a decade. Learn more at www.servicesforeducation.co.uk

For further information on ‘Leading Through Uncertainty: How Charity Leaders Balance Impact, Financial Sustainability and Culture’ and Services For Education:

David Clarke, Clarke Associates, (Public and media relations, Services For Education)

E: david-c@clarke-associates.co.uk;

M: 07808 735255

Issued on behalf of:

Services For Education
Unit 3 Holt Court
Holt Street
Birmingham Science Park
Aston
Birmingham B7 4AX