Tuesday, 17 March 2009

Half of UK charities suffer from downturn

More than half of charities say they have been affected by the financial downturn, according to a survey by the sector watchdog.

The Charity Commission, which gauged the impact of the credit crunch in a poll of 1,000 organisations carried out in February and published on Tuesday , said 52 per cent reported tougher times compared with 38 per cent only five months earlier. About three in 10 charities surveyed are suffering a drop in income as a result of the recession.

Dame Suzi Leather, who chairs the Charity Commission, said: “Clearly the impact of the financial downturn on charities is widening and deepening. Some charities still face that double whammy of a drop in income as well as an increased demand for services.”

Worst hit are moderately large charities, which lack the powerful brands of the largest organisations but cannot survive on the generosity of a few wealthy donors. Among charities with an annual income of between £100,000 and £1m, 42 per cent said the overall impact of the downturn was “significant” or “very significant”.

But the survey also shows that a surprisingly large number of charities feel relatively unaffected by the recession.

Only a quarter of charities overall said the impact had been significant or very significant – lending support to the maxim that charitable giving is one of the last activities to be hit in a recession.

Stuart Etherington, chief executive of the National Council for Voluntary Organisations, said: “This demonstrates that the recession is having an impact on charities, but that not all charities are experiencing the downturn equally, and that some will need more support than others.”

He was encouraged by the survey’s finding that one-third of charities were already taking steps to combat the effects of the downturn.

These steps are often painful, however. Some charities have responded to the credit crunch by drawing on their reserve funds, but for many smaller charities such funds are limited. A more common method was to reduce costs, according to the survey, which covered England and Wales.

In several cases, including that of the overseas aid charity Oxfam GB, this involved job losses.

Dame Suzi said drawing on reserves “is not a step that should be taken lightly”. But she added: “It is important to remember that reserves are collected for this purpose – now is the rainy day they have been saving for”.

Commenting on the recession, John Low, chief executive of the Charities Aid Foundation, said: “The vulnerability of smaller charities is of particular concern.”


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