How charities can assess their financial strategies for 2026

Identifying the funds required to meet day-to-day costs and short to medium-term spending commitments is an important step, as is having easy access to funds that will help meet unexpected needs. This leaves the question of how best to utilise reserves that could potentially be put away for the longer term.    

It can be difficult to find time to focus on long-term financial plans when there is also the need to focus on delivering critical services. But, as we approach 2026, it can be a time to take a fresh look at your strategy to make sure it is still appropriate for your circumstances – and whether it is providing you with positive returns on your reserves.  

Maximising returns

The recent rise in the Financial Services Compensation Scheme’s deposit protection limit from £85,000 to £120,000 provides organisations with an opportunity to look again at how they are managing their reserves and whether they are generating the returns they could be.

The change means that charities can keep more of their money in one account, with the reassurance that these funds are protected. Charities could consider whether they can consolidate existing accounts, which may reduce the administrative burden of managing multiple provider relationships while simultaneously delivering greater financial returns.

For some charities, deposit platforms could offer a compelling solution to best maximise the value of any remaining reserves. Acting as a central hub, deposit platforms enable organisations to place funds and access a wide range of interest-bearing accounts across a range of terms from multiple providers, all through a single platform and one application. This simplifies financial management while unlocking better rates and offering a broader range of account choices.

Rate changes and investment funds 

Charities should also take into account the potential impact of changes to the Bank of England’s base rate. Following a steady decline in the rate over the last 18 months from the post- pandemic high of 5.25%, organisations should be prepared for this downward trend to continue into 2026. 

The potential for future base rate reductions offers a timely opportunity for charities to reassess whether their current savings accounts align with their spending priorities. Those aiming to grow their reserves for future capital projects might find investment funds a more effective option. 

Investment funds often provide interest rates superior to those offered by current accounts and can guarantee a minimum return over a fixed period. This can help organisations to prepare for the future while safeguarding the value of their reserves against further rate cuts.

Sector organisations also have the option of investing in funds that help them to further their values. Investing in ESG funds puts money to work with companies that are screened considering environmental, social, and governance factors, while ensuring financial returns to secure the future of their organisation. 

Loans to invest 

Ensuring your reserves are providing the best possible return for your circumstances is not the only option charities should be considering for 2026.

Investing in infrastructure and services can be key to ensuring continuity of service and futureproofing their delivery, potentially saving money further down the line as properties get older and require more upkeep.

Borrowing doesn’t just mean choosing a bank to provide you with the funds to invest in your operations, it can mean teaming up with a lending partner that will understand your needs and help to strengthen your resilience. Talking to providers about your charity’s ambitions will help them to understand your aims, and discuss your options, and provide you with a loan facility tailored to your requirements.