Digital Threats, Real Costs: Why Cybersecurity is a Financial Priority for Charities

Charities today operate in a highly digital environment, processing online donations, managing cloud-based records, and collaborating through virtual platforms. Yet, cybersecurity is still too often regarded as an IT issue, sitting apart from trustees’ financial responsibilities.

In truth, the charity sector is disproportionately targeted. According to the Cyber Security Breaches Survey 2024, 32% of UK charities experienced a cyberattack in the past year​. These incidents are real financial events, often involving serious disruption, loss of funds, and long-term reputational harm.

Today, we’re looking at cybersecurity from a different angle, as a core part of good financial management for charities. If you are wondering what practical, cost-effective steps you can take to protect your charity’s assets, reputation, and future, it’s time to dive in.

Charities Under Siege: Why Nonprofits Are Prime Targets

Digital transformation has enabled charities to fundraise, communicate, and deliver services at unprecedented scale, but it has also widened their attack surface. Several factors combine to make the sector particularly attractive to cyber-criminals.

Key Drivers of Vulnerability

• High-value personal data – Donation records, payment details, beneficiary information, and staff HR files hold significant resale value on illicit markets.
• Resource constraints – Fewer than one in five UK charities maintains a dedicated cyber-security post. Most depend on part-time IT support or outsourced suppliers, limiting continuous monitoring and rapid response capacity.
• Culture of trust and openness – Staff and volunteers are mission-driven and service-oriented, which can make them more susceptible to social-engineering tactics.
• Extensive use of third-party platforms – Cloud-based CRMs, online giving portals, and event-ticketing services introduce supply-chain risk if vendor security standards are inconsistent or poorly integrated.
• Reputational considerations – Charities may avoid aggressive legal action or public disclosure following an incident, reducing perceived consequences for attackers.

What Cyber Threats Charities Face

The most common attack methods include:

• Phishing and spear-phishing – Deceptive emails that persuade recipients to divulge credentials or authorise fraudulent payments.
• Ransomware – Malware that encrypts data and demands payment for decryption keys; now widely available as “Ransomware-as-a-Service.”
• Business Email Compromise (BEC) – Gaining access to, or impersonating, internal email accounts to alter payment instructions or redirect funds.
• Supply-chain infiltration – Compromising a trusted vendor and leveraging that relationship to access the charity’s systems.

According to the same Cyber Security Breaches Survey 2024, 86% of UK charities that suffered a breach cited phishing as the method of attack​.

The Hidden Costs of a Breach

When a cyberattack strikes, the immediate disruption is only the beginning. The financial damage often unfolds in layers, some visible, others buried in reputational fallout, compliance failures, or the quiet erosion of donor confidence.

Direct Financial Losses

A single breach can trigger costs that many charities are unprepared for:

• Ransom payments – Ransomware demands surged in 2024, with the average demand increasing by nearly $1 million, and many victims still failing to recover full access to their data.
• Recovery expenses – The Edinburgh Festival Fringe Society reported a £95,000 cost following a ransomware attack in 2022, with just £25,000 covered by insurance.
• Insurance shortfalls – Many policies include exclusions or limits, leaving charities exposed during recovery efforts.

Indirect Financial Pressures

Even if no ransom is paid, the ripple effects can be long-lasting:

• Lost donations – Donor trust may be shaken if their personal data is compromised.
• Paused operations – System downtime can halt programmes, delay payments, or disrupt communications.
• Regulatory fines – Under GDPR, penalties for data breaches can reach 4% of annual turnover or €20 million. In 2017, eleven major UK charities, including Oxfam and Macmillan, were fined a combined £138,000 for data misuse.
• Reputation damage – Personal data from supporters of Friends of the Earth, Battersea, and Cats Protection was leaked via a compromised supplier. The ICO opened an investigation.
• Media exposure – High-profile cyber incidents often attract negative press and scrutiny from stakeholders.
• Fractured partnerships – Corporate partners may reassess risk following a breach.

Where Most Charities Fall Short

While cybersecurity risks are well documented, many charities still lack the basic structures to manage them effectively. It’s not usually due to indifference, but because capacity is stretched, expertise is limited, and security is often seen as something to revisit later. Unfortunately, “later” often comes too late.

Most breaches exploit preventable gaps. Across the sector, the same patterns appear:

• Weak or shared passwords – Passwords reused across accounts or stored in unsecured files remain one of the most common risks. Without strong password policies, charities are easy targets.
• Lack of multi-factor authentication (MFA) – Many platforms now offer MFA as standard, yet it’s often left disabled. Enabling it adds a crucial layer of defence, particularly for staff working remotely.
• Unpatched software – Outdated systems are highly vulnerable to known exploits. Charities often delay updates, but this can leave the door wide open for cybercriminals.
• No formal cybersecurity policy – Without a documented plan, staff and volunteers may be unclear on what steps to take if they spot suspicious activity, or worse, during an active breach.
• Limited training on digital risks – Staff and volunteers might be deeply committed to the mission but unaware of how a simple phishing email could compromise donor records. Cyber awareness needs to be part of regular onboarding and trustee oversight.
• Overreliance on third-party platforms – It’s common for charities to use external systems for CRM, donations, and accounting. However, while these platforms may be secure on their own, the risk increases if integrations are poorly configured or vendor vetting is inconsistent.

A safety net: Today charity insurance policies increasingly include options for cyber liability cover. While it won’t prevent a breach, charity insurance can help cover response costs, such as legal fees, data restoration, and communications support, should the worst happen.

That said, insurers are asking more detailed questions about digital risk management. Having documented policies, board-level oversight, and training programmes in place could help lower your premiums or even make you eligible for coverage in the first place.

The Role of Financial Management in Cybersecurity

Cyber-security succeeds when it is embedded in the same governance framework that already protects charitable funds. Treat it as another class of financial risk, no different from foreign-exchange exposure or cash-flow volatility, and the board gains clear lines of sight, measurable controls, and a basis for continuous improvement.

Financial Controls: The First Line of Defence

Internal financial processes can either strengthen your cybersecurity posture or leave you exposed. Trustees should ensure:

• Dual authorisation on all payments – Whether approving supplier invoices or releasing payroll, require two credentialed users, ideally on separate devices, to confirm the transaction.
• Segregation of duties – Prevent a single individual from initiating, approving, and reconciling the same payment. This principle frustrates both internal fraud and external compromise.
• Least-privilege access to finance systems – Grant each user only the permissions necessary for their role and review entitlements quarterly in tandem with HR records.
• Daily or weekly reconciliations – Rapid detection of unauthorised transfers limits losses and provides early warning that credentials are in hostile hands.

Board Oversight and Reporting

Under GDPR and Charity Commission guidelines, trustees are expected to ensure financial and data systems are secure. This includes the following measures:

• Place digital risk on the formal risk register – Map impact and likelihood alongside other financial threats.
• Align with Charity Commission guidance – CC8 (internal financial controls) and CC26 (risk management) both expect trustees to consider cyber threats explicitly.
• Schedule standing agenda time – A five-minute update in each board or finance committee meeting keeps attention high and ensures incident metrics are monitored like any other KPI.
• Conduct annual scenario testing – Table-top exercises reveal gaps in decision rights, media responses, and budget provisions before a live incident does.

Governance insight: When trustees view cyber-security through the lens of fiduciary duty, investment decisions become clearer, accountability strengthens, and auditors gain confidence in the charity’s resilience.