Their report said it was even tougher for smaller charities, who make up 96% of the sector. Small charities are classed as organisations that make less than £1 million each year, the document said one in five are struggling.
Large charities, that make more than £5 million a year said reductions in public or government funding is one of their largest concerns.
The report also highlighted that a third of charities had dipped into their own pockets to cover a shortfall in income.
There has also been evidence charities have been teaming up with other voluntary organisations and private companies to help cut costs and streamline work. The report brought to light that 55% collaborated with other charities and 28% worked with private organisations in the last year.
These financial problems have come as demand for charities has been growing, more than three quarters of charities said they have seen an increase in the last year, and 83% said they anticipate a rise over the coming year.
Deborah Fairclough is the Head of Research at the Charities Aid Foundation.
Speaking on Premier's News Hour, she said: "Maybe what they don't see is lots of smaller groups helping out in lots of different ways... and they're doing a lot of work in hospitals, the hospice movement, and maybe people don't realise."
She added: "Over three quarters (of charities) have said they saw an increase in demand for their services in the last year, there's been a reduction in government funding for a lot of charities, there's economic uncertainty and people don't have as much disposable income, they may not be able to give as generously."