Global shocks and the practicalities for charities

Charities should therefore consider taking practical steps now to mitigate as much risk as possible:

1. Reassess forecasts and budgets Ensure financial plans reflect potential sustained increases in energy costs, the longer-term effects of inflation on expenditure, and the risk of reduced funding or donations as households and funders tighten spending.
2. Review going concern and reserves policy Rising costs and constrained income may erode unrestricted reserves more quickly than anticipated. Trustees should revisit reserves levels and confirm that the going concern assessment remains robust.
3. Assess the adequacy of restricted funds Consider whether restricted funding remains sufficient to deliver projects where costs have increased. Where shortfalls arise, early engagement with funders may be necessary to seek variations or uplifts.
4. Revisit the investment policy Confirm that the charity’s risk appetite remains appropriate, particularly where significant funds are invested in equities or market-linked instruments. Market volatility may affect both capital values and income expectations.
5. Revisit and update the risk register Trustees should review whether global developments (e.g. energy price volatility, funding uncertainty, investment market fluctuations or funding changes) create new principal risks or increase the likelihood or impact of existing risks.