Credit Crunch

Charities suffer due to falling donations

It’s being reported this week that the economic slowdown in the UK is hitting charities hard with nearly one third reporting a drastic drop in donations.

The charities who reported the drop in their incomes said they had seen a noticeable drop in individual donations, while more than 80% of them expect their income from donations to fall yet further before the year ends.

According to the Charities Aid Foundation and the Association of Chief Executives of the Voluntary Sector, the problem isn’t being helped by rising inflation, with over 70% of chief executives of charities saying their costs have gone up as donations have decreased.

Because of that, around 30% of charitable organizations have been forced to make redundancies and 50% have also limited staff pay rises.

Most charities reported that they had increased their fundraising activities hoping to boost their income and have also increased the number of grant applications they made this year. The fall in the income of many charities has come at a time when they are facing an increased demand for their services, with more than 70% of those surveyed reporting a rise in requests for charitable assistance.

The Charities Aid Foundation said that the fall in donations has bucked the trend they have seen during previous times of recession when individual donations tended to remain relatively stable. John Low, chief executive of the Charities Aid Foundation, said,

“This research reveals the economic quandary that many charities are facing - increasing costs and demand for their services against a backdrop of static or declining public donations.”

However he added that charities’ income could be increased by around £700 million a year if everybody who made a charitable donation did so using the ‘Gift Aid’ scheme which allows charities to reclaim the basic rate of income tax on those donations.