A ‘perfect storm’ of workforce pressures and rising employment costs combined with reduced funding and growing service demand is forcing UK charities to consider jobs cuts – according to a new industry poll*.

A survey of charity professionals has found that over three-quarters (76%) expect some reduction of funding into 2026, with 22% anticipating a significant cut. This financial strain is worsening the personnel challenges organisations are dealing with due to increasing tax costs and ongoing changes to employment legislation.

The current biggest personnel challenge identified by the charity sector is the sharp rise in National Insurance Contributions (NICs) and overall employment costs — cited by over 62% of respondents. This follows the NICs rise in April to 15% and the National Living Wage increase to £12.21 per hour, both of which are hitting charity budgets hard.

Recruitment and retention difficulties are also a major workforce concern, with over a quarter (26%) saying they are struggling to attract and keep talent in an increasingly competitive market.

With such pressures mounting, over half (55%) of respondents said redundancies in 2025 and 2026 are either possible, likely, or already underway. Such job cuts could cause significant disruptions to organisations at a time when public reliance on third-sector support is at a record high. 

“Charities are being asked to do more with less,” said Jo Chambers, HRC Operations Director at WorkNest. “Rising employment costs, evolving workplace and employee legislation, and stretched workforces are colliding, at the same time that the demand for nor-for-profit services is peaking.

Without proactive planning and support, the risk to staff wellbeing and service delivery is significant.”

*poll by WorkNest.