Donations to charity fell by £2.3bn in real terms during 2011/12 compared with the previous year, according to research by the Charities Aid Foundation and the National Council for Voluntary Organisations.
The report UK Giving 2012, published today, found that total donations in 2011/12 were £9.3bn, a fall of 20 per cent. Donations were down £1.7bn on 2010/11 in cash terms and £2.3bn when adjusted for inflation, the research says.
It is the biggest slump in giving since the survey was launched in 2004/05.
The report, based on a survey of more than 3,000 people carried out by the Office for National Statistics, found that the number of people giving to charity declined along with the amount donated.
It shows the proportion of people donating to charitable causes in a typical month fell from 58 per cent to 55 per cent in 2011/12. The average amount given per donor in a typical month fell from £11 in 2010/11 to £10 in 2011/12.
Medical research, hospitals and hospices, and children and young people were the most popular causes. Religious causes received the largest average donations.
Last year, the survey says, donors gave £11bn in 2010/11 compared with £10.6bn the previous year. But inflation meant the value of donations was flat.
The report links the sharp drop in donations this year to the ailing economy and the return to recession in the first quarter of 2012, although it says it has not sought to establish the cause of the decline.
Richard Harrison, director of research at CAF, said it was "highly possible" the economic issues were to blame. "We hope it is a one-off drop and not the start of a trend, but it is impossible for us to say," he said. "The issue is that we cannot afford to take that gamble. We know charities are suffering.
"We know it is hard out there. Demand is increasing during the recession, yet revenues are under pressure."
In response to the report’s findings, CAF and the NCVO have today launched a campaign called Back Britain’s Charities, which is aimed at government, members of the public and charities themselves.
They are calling for people to support charities through regular giving. They are also asking the government to modernise and promote Gift Aid and payroll giving, and to ensure that public bodies do not cut funding for charity disproportionately when reducing spending. The campaign calls on businesses to support charities through donations or practical means, and urges charities to work with the government to modernise and improve fundraising and enhance their impact.
Fiona McEvoy, campaigns manager at CAF, said: "We are talking to the sector itself to make sure all the money we receive through donations and funding is used effectively and efficiently – that every pound goes as far as it possibly can."
The report notes that charities are coping with falling donations and public spending cutbacks by dipping into their reserves, closing front-line services, making redundancies and even looking at closure.
Sir Stuart Etherington, chief executive of the NCVO, said: "I am very worried fewer people are giving to charity. Charities are already being squeezed by greater needs, cuts in funding and rising costs."