Falling income from grant-makers and corporate donors is 'a time bomb for charities'

Charity Market Monitor report, by Cathy Pharoah, says there are signs grant income will fall sharply

Charities face a time bomb in the shape of sharply falling income from grant-makers and corporate donors, according to a study of the finances of the 300 largest fundraising charities.

Charity Market Monitor, a Caritas Data analysis of information from charities' annual reports, found that the voluntary income of the 300 largest fundraising charities rose by 0.9 per cent in real terms in the year to June 2008.

Their overall income also rose by 1.6 per cent in real terms despite the fact that more than a third of organisations reported that income had declined.

The report's author, Professor Cathy Pharoah of Cass Business School, said there were signs that grant income for charities would fall away sharply in future years.

"A lot of funders have less money," she said. "But that hasn't started to trickle through to operating charities yet.

"Grant funders rely on receiving money from investments and from major donors. But the basis for donations from major donors is much weaker. There's not as much money around.

"Charities face a time bomb of falling grant income in future years."

She said that donations in kind and cash from corporations had risen in the year to June 2008, but she did not expect it to continue to grow.

But she said the fact that there were still rises in some sectors during a recession indicated that the charity sector had a strong financial base.

"The charity sector is still showing resilience," she said. "But there are signs there's worse to come.

"There was already a 1.6 per cent drop in the value of donations from the public, and the report does not cover the worst part of the recession around Christmas 2008."

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