TLDR: Critical Insights from 2025’s Key Sector Reports

By Sophia Mobbs, Head of Skilled Volunteering, Link UP London | Sep 2025

In 2025, the charity sector has seen plenty of challenge and change. This year, four major reports – The Road Ahead, Charity Digital, The UK Spending Review, and Mission Critical 3 – paint a clear but complex picture: our sector is navigating a period of significant pressure, but also possibility.

To help make sense of what this means in practice, our Head of Skilled Volunteering, Sophia Mobbs, has taken a deep dive into these reports and pulled out the insights that matter most for charities right now.

2025 has presented a perfect storm for charities, albeit with silver linings

NCVO’s The Road Ahead (2025) documents the pressure which many charities are feeling on the ground – we are facing growing demand, with diminishing resources.

This ‘perfect storm’ spans:

• Funding not keeping up with inflation
• Increasing competition for grants
• Growing demand
• Rising operating costs
• Fewer individual donations and volunteers
• Board vacancies and lack of custom financial services for charities resulting in lack of financial expertise
• Increasing numbers of long-term vacancies in the sector and staff training cutbacks
• Mental health impacts on senior leaders

Despite these challenges, charities have succeeded in retaining strong levels of public trust – a testament to the difference our work is making, despite the challenging conditions. There is huge potential here for charities to continue earning and leveraging this trust and be reliable forces for good even in a divided and uncertain climate. .

To achieve this, NCVO reminds charities to reject mission creep and funnelling full efforts towards the delivery of your core mission.

Digital continues to provide, divide and confuse!

In the 2025 Charity Digital Skills Report, we see charities working hard to adopt digital and leverage its value, whilst fending off the significant pressures that hinder this progress.

On one digitally savvy hand:

• Charities are experimenting with AI at a rapid pace; with 76% of charities in 2025 now using AI tools (compared to 61% in 2024)
• Roughly half of charities are prioritising their strategy for digital (49%) and are developing an AI policy (48%)
• 43% of charities say that growing staff/volunteer digital skills is a top priority

However on the other hand things aren’t so simple:

• Over a third (35%) of charities say they are poor at using AI tools in everyday work, while 29% say they don’t do it at all. This means that almost two-thirds of charities (64%) either struggle with or are not using these tools.
• Charities report that the areas they are struggling with most are making the most of their website analytics, online fundraising, SEO, email marketing, and digital campaigning
• Charities reported that squeezed organisational finances, difficulties in resourcing development for digital infrastructure, and lack of headspace and capacity are the biggest barriers to their digital progress

Undercutting these findings are further statistics which show that large charities tend to be more digitally savvy, and have adopted AI more readily. Given that small and medium sized charities are often led by those with lived experience, it implies a growing digital divide.

Shifts in funding – Local authorities and contracts will play a greater role in funding charities futures

The UK Spending Review sets the financial backdrop for the years ahead.

Local authorities are gaining more power and funding – which could open new doors for charities, but also create uncertainty as the system adjusts.

Funds shifting

Local authorities will get an extra £3.4 billion by 2029, averaging a 3.1% real-terms increase in spending power. This shift to more regional decision-making could be positive, but it will take time to adjust and there are worries about how fairly resources will be shared across regions.

Procurement contracts are also set to favour VCSEs, which could give councils more scope to uplift grants and contracts. That’s good news for charities that rely heavily on government funding, but it could also increase competition between organisations and risk underinvestment in other funding streams.

Cuts to

• Welfare cuts announced earlier remain in place and could push an additional 250,000 people into poverty by 2029, increasing demand for VCSE support
• Cuts to UK aid from 2027 onwards continue, placing strain on international development charities-many are already scaling back operations or reducing staff

Benefits added

• The reinstatement of Winter Fuel Payments for households earning up to £35,000 may ease pressure on charities running food banks, warm hubs, and emergency advice services.
  The extension of free school meals and the pledge to end use of asylum hotels could similarly reduce strain on support services.

The Covenant has presented a bold vision for government and civil society partnership

Finally, The Future Governance Forum’s Mission Critical 3 (2025) details 6 practical recommendations that will enable civil society organisations and the Government to hold an equal partnership, in line with the principles of the Covenant:

1. Invest in better government-civil society partnerships: The government must take responsibility for instigating meaningful, cross-department relationships with civil society that are flexible to local priorities and built on partnership, not hierarchy.
2. Involve civil society throughout the policy development lifecycle: Beyond standalone formal consultation exercises, civil society should be brought into decision-making about policy and implementation.
3. Strengthen expertise across the civil service; Civil servants should have the skills, knowledge, and resources to work effectively with charities. This includes training, learning opportunities, and secondments that allow them to understand the sector better.
4. Include charities in “test and learn” approaches: Civil Society orgs should be included at a local level, learning what works from the bottom up and using those insights to shape wider policy.
5. Embrace respectful disagreement: Good partnerships allow for different views. Constructive disagreement can improve decision-making and lead to better outcomes for everyone.
6. Create a satellite account for Civil Society: The government should keep better data on the economic and social impact of charities, making it easier to understand the full value they bring.

Practical steps are now needed to bring these to life. If these were to be implemented, imagine what the sector could look like this time next year!

What it means for charities right now

Taken together, these reports offer both a warning and an invitation. Charities are under extraordinary pressure, but also uniquely placed to respond with creativity, collaboration, and resilience.

At Link UP London, we know that Skilled Volunteers can inject skills, boost confidence and unlock capacity for small charities when they need it most. If any of these insights have resonated with you, and you’re ready to make an impact for good, reach out today to join the Skilled Volunteer programme – as an organisation, or a volunteer!

Report Links:

1. The Road Ahead – https://ncvo-app-wagtail-mediaa721a567-uwkfinin077j.s3.amazonaws.com/documents/ncvo_theroadahead_a4_5jd_3.pdf
2. Charity Digital Skills Report 2025 – https://charitydigitalskills.co.uk/wp-content/uploads/2025/07/Charity-Digital-Skills-Report-2025.pdf
3. The UK Spending Review 2025 – https://www.gov.uk/government/publications/spending-review-2025-document/spending-review-2025-html
4. Mission Critical 03 – https://www.futuregovernanceforum.co.uk/resource/mission-critical-03/