How to navigate the SORP, Fundraising Code and Charity Governance Code

A perfect storm of governance changes: navigating the SORP, Fundraising Code and Charity Governance Code

What this blog covers

• What governance changes have hit charities?
• What do they mean for charity Trustees?
• How do they affectgovernance managers?
• What Trustees should do now?
• A Trustee Checklist: 7 steps to address the regulatory changes.

Three major governance changes in the form of three different pieces of major charity governance architecture landed on England and Wales charity trustees within weeks of each other in late 2025: the Charities SORP 2026, a new Code of Fundraising Practice, and a refreshed Charity Governance Code. Not all of them apply to every charity, and not all are equally urgent. We propose triaging them by applicability, legal status, effective date, risk exposure and workload.

This pace continued in the first half of 2026 with the Charity Commission releasing new guidance monthly. Given this perfect storm it’s not surprising that Trustees are finding it difficult to understand and prioritise the regulatory implications for their charities.

What are the three main areas of charity governance guidance and what has changed?   

Statement of Recommended Practice 2026 (SORP): The Trustees’ Annual Report is more than a compliance document—it’s a cornerstone of accountability, transparency, and communication. It tells the story of your charity’s purpose, achievements, and financial health. SORP 2026 introduces a cumulative tiered approach to reporting based on a charity’s gross income, ensuring proportionality while raising expectations for clarity and impact.

If your charity uses accruals accounts and your financial year started on or after 1^st January 2026, these new rules apply.

If you are responsible for preparing accruals accounts, these changes are likely to impact your charity’s reporting and accounting. See our Guide to the Statement of Recommended Practice 2026 for full details.

Code of Fundraising Practice 2025 (CFP): The Code of Fundraising Practice sits within the responsibilities of the Fundraising Regulator and sets the standards that apply to fundraising activity for charitable, philanthropic or benevolent purposes conducted by all charitable institutions and third-party fundraisers in the UK. Its aims are to:

• Promote consistent, high standards of fundraising
• Explain what is expected from charitable institutions, their governing bodies and fundraisers
• Explain what we will consider when investigating complaints
• Provide information for charitable institutions to help them assess their fundraising activity and deal with any issues they identify; and
• Develop a culture of honesty, openness and respect between fundraisers and the public.

New fundraising standards came into force from 1 November 2025. The standards, which use a principles-based approach and apply to any charity that undertakes fundraising from the public require fundraisers to think about how their activities meet fundraising principles. For example, what actions are ‘appropriate’, ‘reasonable’ and ‘proportionate’ for a planned activity.

Charity Governance Code 2025 (CGC): A voluntary standard by which Trustees can improve and measure their individual performance, and the wider Board governance of charities. It reflects the legal obligations on Trustees, as set out in the Charity Commission’s The Essential Trustee (CC3), and supports these with practical suggestions on how to ensure good governance in organisations of all sizes.

The refreshed version of the Charity Governance Code, published in November 2025, was the first update to the Code in five years and offers Trustees and their charities a clearer, more practical way to improve how they operate and deliver on their purposes.

Most charities aspire to meet this Code in practice because; it sets out what best practice governance looks like. See our Charity Governance Code 2025 explainer here.

What are the three key changes for charity trustees?

1.  Principles based fundraising: The new Code moves away from prescriptive rules and requires trustees to exercise judgement, document decisions, ensure fundraising is legal, open, honest and respectful and reflects positively on fundraising in general. This increases scrutiny on governance processes, due diligence and oversight of third‑party fundraisers.

2.  Greater transparency in reporting: SORP 2026 introduces:

• • Tiered reporting
  • Enhanced narrative requirements
  • New rules on revenue recognition and leases.

Trustees must ensure impact reporting is clearer with an emphasis on environmental, social and governance matters (ESG). Reserves policies need to be justified, and complex income streams (e.g., memberships, multi‑year contracts) should be accounted for in a consistent manner.

Everyone preparing accruals accounts has work to do here. Charities above £500,000 gross annual income have an additional step-change in narrative reporting obligations.

All charities impacted should start managing their data collection, assurance and governance reporting as soon as possible.

Even those below the £500,000 income threshold preparing accruals accounts would need to take heed of, amongst other changes, those to impact reporting and the accounting changes to income recognition and leases as applicable.

3.  Strengthened governance expectations: The updated Charity Governance Code (2025) reinforces board effectiveness, risk management, and ethical leadership. Combined with fundraising and SORP changes, trustees must show:

• Active stewardship
• Robust decision‑making
• Clear accountability for organisational culture and sustainability.

There is an emphasis on board culture, board diversity and strong working relationships.

How did these new regulations affect me as a governance manager?

For any charity, this trifecta of changes presents a challenge both in capacity and approach. The first thing to determine when facing regulatory changes is an order of priority. This involves considering the applicability and nature of the changes, determining what applies to your charity’s activities, what your level of risk tolerance and exposure are and conducting a preliminary assessment of the work needed as a result of the changes.

When these changes hit, I (Suneet) was delivering a role as part-time Governance Manager for the Association for Language Learning, a small membership body, and I suddenly became very busy with the following:

1. Code of Fundraising changes: An audit of the organisation’s fundraising page and review of the charity’s fundraising practices
2. Code of Fundraising changes: Extensive website refresh to reflect the new principles-based approach and add commercial participatory language.
3. Switch from accruals to receipts and payments accounts due to the charity being under the SORP’s £500,000 income threshold (and therefore a Tier 1 charity). This avoids the need for SORP compliance and ensures proportionate financial governance for a charity of our size.

Applying applicability first was key to resolving this governance challenge. We also then put in place further financial reporting safeguards to support the transition.

As the Charity Governance Code is voluntary with an apply-or-explain approach, it fell to the bottom of the pile of things to do given the implementation sequencing and nature of the other changes. Its significance remains high, however, given it is the best practice benchmark for the sector to aspire to. We ultimately revisited it not long afterwards as part of the evaluation of governance practices.

What should trustees do now?

Review and adopt the triage framework in sequence is as follows:

1. Organisational applicability. Work out what regulatory tier your organisation falls into and which changes affect it? Map it onto real activities – public fundraising, accruals accounts, leases, subscriptions, contracts, legacies, restricted grants. A change that dominates sector press reporting may not actually touch you; one that nobody mentions may hit you hard.
2. Status and nature of the requirement. Is it an accounting requirement, a legal duty, a regulator’s expectation, or a voluntary benchmark? A voluntary code usually doesn’t belong in the same priority as a statutory duty.
3. Effective date that the regulation starts and the amount of time you have left before you need to take action. Record both. Watch for changes tied to your organisational financial year rather than a calendar date. Work backwards to the date you must start and get it into everyone’s calendars
4. Risk and exposure. Two charities of identical size can differ sharply. High-volume public fundraising carries more exposure to the Code of Fundraising Practice than a charity with a single grant; a large property portfolio carries more lease exposure; funders requiring audited accounts leave less flexibility than the law alone suggests. Weigh up your risk appetite and exposure.
5. Implementation workload. How much effort will it require to comply? Is a policy rewrite needed, a data-collection change, a systems change, a board decision, or a governing document amendment? Some take an afternoon; others might need to be started from scratch and take weeks or even months to implement. Be honest about capacity and plan accordingly.

 A Trustee Checklist: 7 steps to address the regulatory changes

1. Check organisational applicability Start by understanding which framework applies to your type of charity (e.g. SORP requirements vary according to whether your annual income is below £500k, between £500k and £15m income, or above £15m).
2. Check your accounting basis as soon as possible (this should ideally have been before the start if your 2026/27 financial year, but that date has passed for many organisations). Non-company charities under £500,000 may have a choice. Take options to the board; it’s a trustee decision, not a finance one.
3. Triage before you act. Consider what actions are required in what sequence using the five steps above. Applicability alone will shorten the list.
4. If you fundraise from the public, prioritise this immediately. The CFP already applies to complaints. Audit your materials, refresh wording anywhere that describes how your organisation fundraises, its principles and practices, due diligence, how rules are applied etc). Record the reasoning behind your fundraising judgments – principles-based regulation expects evidence of reasoning, not just compliance.
5. Assess what data collection you need for impact and sustainability reporting (ESG). Impact, outcomes, volunteer numbers and case studies cannot be reconstructed at year-end. See Eastside People’s Guide to the reporting elements of the SORP 2026 here.

Access our FREE Environmental, Social and Governance (ESG) survey designed for charities and not-for-profits to assess their progress every year. This will enable you to:

• • Understand your current ESG position
  • Plan practical next steps.

6. Consider when to review CGC (once the mandatory work is done). Benchmark your governance against the eight principles and draft your ‘apply or-explain’ statement for the annual report. If you have income above £1m you should seek an external independent review every 3 years. See Eastside People’s Guide to the CGC here.
7. Create a board action plan. Treat compliance changes as a cross-framework project, rather than isolated updates. Keep this as a standing item at Board meetings so that you maintain momentum and can minute when actions are complete.

Charity SORP, Governance Code and Fundraising Code of Practice FAQ’s:

1. Does the Charities SORP 2026 apply to my charity?

THE SORP applies if you prepare accruals accounts. If your charity prepares receipts and payments accounts, the SORP does not apply to you at all. If you do prepare accruals accounts, SORP 2026 applies to accounting periods beginning on or after 1 January 2026. A charity with a 31 December year end will first report under it for the year ending 31 December 2026; a charity with a 31 March 2026 year end, will first report for the year ending 31 March 2027.

2. When did the new Code of Fundraising Practice come into force?

The new Code of Fundraising Practice came into force on 1 November 2025, after a six-month transition period. The Fundraising Regulator applies it to complaints received on or after that date, which is why it needed attention faster than the other changes. It applies to any charitable institution fundraising in the UK, and to third-party fundraisers working on their behalf.

3. Is the Charity Governance Code compulsory?

No. It is a voluntary benchmark, not law or regulation, and it assumes you are already meeting your legal duties. It works on an ‘apply or explain’ basis, so charities that adopt it publish a short statement in their annual report setting out how they apply the eight principles, or why they take a different approach. Funders and commissioners increasingly ask about it, so voluntary does not mean ignorable.

4. What are the new charity accounting thresholds from 30 September 2026?

For financial years ending on or after 30 September 2026: non-company charities can prepare receipts and payments accounts up to £500,000 income, rather than £250,000.

Audit is required above £1.5m income or £5m assets, up from £1m and £3.26m.

Independent examination is required above £40,000 income, up from £25,000, and the examiner must be professionally qualified above £500,000, up from £250,000.

5. Can our charity switch from accruals to receipts and payments accounts?

Possibly, if you are a non-company charity below the gross annual income threshold of £250,000, increasing to £500,000 on 30 September 2026 for the relevant financial years. Charitable companies cannot: they must prepare accruals accounts regardless. Check your governing document too, as some require accruals accounts or an audit whatever the law says. This is a trustee decision rather than a finance one, and it should be taken to the board with the reasoning recorded.6. Are membership subscriptions donations or exchange transactions?

It depends on what the member gets in return. If the subscription buys tangible benefits, such as a journal, event access or a service, it is likely an exchange transaction, and the five-step revenue recognition model in SORP 2026 applies. That can change when the income is recognised, particularly where the benefits are delivered across a period. If the member receives nothing of substance in return, it is closer to a donation. Membership charities preparing accruals accounts should settle this question early, with accounting advice.

7. Which of these changes should we tackle first?

Not necessarily the one that arrived first. Run each through the five triage steps:

• Does it apply to you at all?
• Is it a legal or a voluntary benchmark?
• When does it bite?
• What is your exposure?
• How much work is it?

For my role at the Association of Learning, the CFP was the most urgent because it immediately applied to handling complaints, the SORP needed the longest lead time because outcomes data cannot be reconstructed at year end, and the CGC could wait without being forgotten.

Complete Eastside people’s FREE online ESG survey and receive an individual report highlighting strengths, gaps, how you benchmark against others and an action plan template.