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From strain to strategy | HR solutions for charities facing financial uncertainty
Written by Jo Chambers and Annabelle Carey on 12 May 2025
As we enter 2025, the charity sector faces a perfect storm of rising operational costs, growing service demands, and increasing complexity in employment law. For HR professionals and leaders in the third sector, the challenge is not just about surviving – it’s about adapting and leading with purpose.
In our recent WorkNest webinar, The Cost of Caring | HR strategies for charities in a financial squeeze, we explored actionable strategies for charitable organisations looking to weather economic challenges while maintaining effective, motivated teams.
Understanding the new world of work
The post-pandemic workplace has dramatically shifted expectations. Employees are increasingly seeking purpose, flexibility, and growth opportunities. This means rethinking traditional HR strategies and embracing a more people-centred approach for charities.
Coupled with this cultural shift are external pressures:
- 22% of attendees reported expecting a significant reduction in funding, and an additional 44% expect some level of reduction in 2025/2026.
- Rising costs, reduced government funding, and increased demand for services are pushing many charities to the edge.
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The financial reality: What keeps charity HR teams awake at night?
According to our poll:
- 62% of attendees cited the rise in NICs and employment costs as their biggest people challenge.
- 26% struggle with recruitment and retention, while a smaller group noted legislative and absence-related pressures.
These statistics reflect an urgent need to rethink budget planning and people strategy.
Getting ahead of legislation: What’s changing and why it matters
New changes under the Employment Rights Bill (ERB) mean:
- Immediate eligibility for statutory sick pay;
- Expanded parental leave rights;
- Scrutiny around zero-hour contracts; and
- And the removal of the two-year service requirement for unfair dismissal claims.
These shifts underscore the need for proactive compliance and training across leadership and HR teams.
Solutions in focus: Practical HR strategies
Here’s what charities can do to build resilience in uncertain times:
Strengthen recruitment and retention
- Review your employer brand — make your mission and culture visible and engaging.
- Simplify your recruitment process and tailor it to today’s digital-first applicants.
- Offer flexibility — it’s no longer a bonus; it’s expected.
Once new hires are in, retention begins with:
- Strong onboarding experiences;
- Regular check-ins and performance reviews; and
- A meaningful, non-monetary recognition culture.
Prioritise wellbeing and culture
Employee wellbeing is no longer optional. Strategies include:
- Promoting mental health through EAPs;
- Embedding well-being into management culture; and
- Fostering inclusion and psychological safety.
Plan for change
Our poll revealed that 31% of attendees believe redundancies are possible in 2025/2026, while 14% are already in the process.
If change is on the horizon:
- Communicate early and transparently.
- Involve your people in the process.
- Offer outplacement support and reaffirm organisational values throughout.
Looking ahead: Strategic workforce planning
Strategic workforce planning helps align HR with long-term organisational goals. Consider:
- Forecasting the skills you’ll need;
- Mapping development pathways for succession;
- Sharing internal knowledge more systematically; and
- Making better use of volunteers and exploring shared service models.
Related Content
FREE WEBINAR
The Cost of Caring | HR Strategies for Charities in a Financial Squeeze
Final thoughts: Efficiency, resilience, and support
The charity sector may be under pressure, but with the right people and strategies, you can continue delivering your mission with integrity and impact. Review your benefits, manage absence more effectively, and build a culture supporting resilience and sustainability.
At WorkNest, we specialise in helping charities navigate complex HR landscapes – from legislation to leadership development. Whether you’re rethinking recruitment, managing change, or planning long-term workforce needs, we’re here to support you.
Contact our team today on 0345 226 8393 or request your free consultation using the button below.