The firm pins the blame for the loss, which amounts to around £400m, on the abolition of the advance corporation tax credit - ended by Labour in 1997 - for the bulk of the drop in the sector's investment income.
Investec says this has cost charities more then £300m, and is responsible for wiping out 16.5 per cent of their income stream.
The Government's grant relief scheme to compensate for the loss of the tax credit ran out in April.
The situation has been compounded by a drop in dividends and the interest rate on charities' cash deposits, which has taken away a further £100m at least, says Investec. Base rates have fallen by 1.75 per cent over the past five years, and dividends by 3 per cent.
"When Gordon Brown took away the tax credit attached to advance corporation tax he thought that the growth in dividends would more than make up for its removal," said Investec's head of charities John Hildebrand. "Well, it hasn't and charities now have to work out what they should do. Regrettably, in many cases, the answer will be that charities now have to cut back on their spending."
The shrinking of their investment income represents a double whammy for a shell-shocked sector already reeling from the three-year stock market crash.
But while the bear market hit the capital value of charities' investments and could in many cases be written off as a paper loss, the diminution of income takes away money destined for projects on the ground.
Helen Verney, finance director at the MS Society, said: "Many medium to large charities are reliant on income from their investments to fund activities, and as a result of the withdrawal of advance corporation tax relief, they will inevitably have had to make cuts in some areas of expenditure."
According to Hildebrand, some charities have reacted to the loss of income by switching to high-yield investments such as bonds. "While this gives a short-term rise in income, it will be fixed, unlike equities, so you are still hitting future beneficiaries," he said.
Others have opted for the total-return approach, where some of the capital gains, as well as income, is taken from investments. But Investec warns that charities can only skim off 1 per cent a year without affecting future growth.
Hildebrand said any decision had to be made by the charity, not their fund manager.
Roger Foreman, director of finance with the Royal British Legion, said: "We have lost significant amounts each year due to the withdrawal of ACT relief and reduced interest rates. But we maintained a level of reserves to compensate for any fall in income and, therefore, did not have to cut spending. I consider that charities with sufficient reserves should keep faith with equities."