# Charity leaders warn financial pressure hits culture

- Link: https://fundraising.co.uk/2026/10/08/charity-leaders-warn-financial-pressure-hits-culture/
- Published: 2026-10-08T11:41:15+01:00
- Author: Howard Lake

**Charities risk damaging their long-term impact if financial decisions come at 
the expense of people, culture and mission, according to new research from education
charity Services For Education.**

The report, _Leading Through Uncertainty: How Charity Leaders Balance Impact, Financial
Sustainability and Culture_, is based on a national survey of 72 charities. It finds
that financial sustainability is the dominant pressure facing leaders, but that 
the human and organisational cost may be underestimated.

## Finance takes most leadership attention

Respondents said financial sustainability was attracting most of their leadership
attention, scoring **4.58 out of five**. Impact and mission delivery followed at
4.04, with organisational culture at 3.7. When asked which area was under the greatest
pressure, 40 respondents, more than half, named financial sustainability.

## Advertisement

 [⌊Posthub advert. You create the campaign. We'll handle the postal journey. Get started at post-hub.co.uk.⌉](https://fundraising.co.uk/ads/posthub-20261007-300x250/)

The pressures cited include funding gaps, contract losses, inflation, National Insurance
increases, low reserves, salary pressures, changes at local authority or government
level, and the need to diversify income. For many charities these have led to restructuring,
changes to pension arrangements, delayed pay decisions, reduced delivery, new fundraising
approaches, or a re-examination of business models.

## Culture as the hidden casualty

The narrative responses suggest that culture is often where financial pressure is
felt most acutely, through workload, morale, wellbeing and the difficult human consequences
of sustainability decisions. The report argues that leaders need to maintain a balance
between financial sustainability, impact and culture rather than choose between 
them.

**Sharon Bell**, Chief Executive of Birmingham-based Services For Education, who
instigated the research after conversations with charity leaders at recent Charity
Finance Group and ICAEW Charity Community conferences, said:

> “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.”

## Governance and innovation

The research also found a sector responding proactively rather than simply cutting
costs. Respondents described strengthening governance and financial reporting, improving
reserves management, redesigning services, investing in impact measurement and embracing
digital transformation. In several cases, financial pressure had acted as a catalyst
for innovation.

Strong governance emerged as a particularly important factor, including effective
trustee oversight, diverse board skills, constructive challenge, succession planning
and leadership development. The report concludes that resilience depends on the 
quality of leadership and governance conversations, making trade-offs visible and
keeping beneficiary outcomes at the centre of decisions.

Services For Education has an annual income of around £7 million and is supported
by Arts Council England, charitable donations and its commercial operations. The
report is available free from the [Services For Education website](https://www.servicesforeducation.co.uk/wp-content/uploads/2026/10/Sector-leadership-Survey-2026.pdf)(
in PDF).

 * **[Fundraising tops charity challenges, Cranfield finds](https://fundraising.co.uk/2026/07/12/fundraising-tops-charity-challenges-cranfield-finds/)(
   12 July 2026)
 * **[Public donations dropped by nearly 10% between 2024 and 2025, says CAF research](https://fundraising.co.uk/2026/03/16/public-donations-down-nearly-10-percent-2024-25/)(
   16 March 2026)
 * **[Third Sector Trends in England and Wales tracks charities’ financial health](https://fundraising.co.uk/2026/01/21/third-sector-trends-england-wales-financial-health/)(
   21 January 2026)**