The Charity Commission has published revised guidance on making grants to charities and other organisations, replacing earlier material with a broader framework for grant-making across England and Wales. The update is aimed at charities that pursue their purposes by funding external bodies rather than delivering services directly. According to the Charity Commission, the guidance covers the full grant cycle, from setting funding priorities and carrying out due diligence to monitoring awards and reporting impact. The regulatory message is practical: grant-making remains a trustee function, and funding decisions must stay anchored to the charity's purposes.
The revision arrives against a tougher financial backdrop for the sector. In March, the Charity Commission said grant-making charities awarded £17.84 billion in 2024, up from £16.97 billion in 2023, including £12 billion to other charities. The same analysis found 32,661 charities reported grant-making activity in 2024, with 20,672 saying it was their main activity, accounting for 83% of grant funding. The Commission has also reported a third consecutive year of financial pressure in parts of the sector, while separate public trust research recorded a three-fold rise in demand for charity services across England and Wales.
One of the clearest changes in the new guidance is the Commission's statement that grant-making charities may provide unrestricted grants to charities with the same, or narrower, purposes than their own. That is a significant clarification for trustees deciding whether funding should be tightly ring-fenced or offered with greater operational freedom. The Commission's reasoning is that unrestricted funding can still further the funder's purposes while giving recipient trustees room to respond to changing beneficiary needs, shifts in activity and pressure on core budgets. In practice, that makes it easier for grants to support the running costs that keep services in place, rather than only narrowly defined projects.
The guidance also confirms that charities can fund organisations that are not themselves charities where that is the best route to reach beneficiaries or extend impact. The Charity Commission notes that this may be particularly useful in communities where few charities are operating. That flexibility is paired with a clear warning on risk. Because non-charities are subject to less regulation, trustees are expected to take reasonable steps to assess and manage potential risks before money is awarded. The Commission says charities should satisfy themselves that a recipient is genuine, understand how it operates and be confident that the grant can be monitored effectively.
The compliance baseline is stated in direct terms. In all cases, the Charity Commission expects a written agreement to be in place and for charities to monitor whether the recipient organisation is meeting the agreed terms. For trustees, that places administration and oversight alongside the funding decision itself. The regulator's expectation is not limited to choosing an appropriate recipient. It extends to checking how funds are used, whether the arrangement remains within the charity's purposes and whether the grant continues to deliver the intended charitable benefit.
Mazeda Alam, Head of Trustee Guidance at the Charity Commission, linked the update to the strain many charities are facing in maintaining services that communities increasingly rely on. She also pointed to the difficulty many organisations face in securing funding for core costs, an issue the revised guidance addresses more directly through its treatment of unrestricted grants. Her position was that grant-makers and philanthropists play an often overlooked role in sustaining the sector, and that the guidance is intended to give them confidence to use informed judgement when awarding funds. The Commission's test remains straightforward: trustees should ask whether a grant will further their charity's purposes and make a practical difference to the people and causes it exists to serve.
The update forms part of the Charity Commission's wider programme to support effective philanthropy under its five-year strategy. The full guidance, titled Making grants to charities and other organisations, has been published on gov.uk. For boards and governance leads, the overall message is permissive but not relaxed. The regulator is giving trustees clearer room to use unrestricted funding and, where justified, to fund non-charity partners. At the same time, it is restating that flexibility must sit alongside due diligence, written terms and active monitoring, particularly as financial pressure across the sector shows little sign of easing.