Grant maker the Baring Foundation has lost nearly £12 million in investment income over the past year.
The figures, released in the foundation's annual report, mean that Baring's total funds have dropped from nearly £79 million in 2000 to £65 million at the end of last year.
Secretary Toby Johns said that the falls will have an impact on the amount of money available for grant giving but not until 2004. "Our grant making is based on the average value of our investments over the past 12 months.
We distribute 4.5 per cent of the average value. The fall in total funds means there is less to distribute but it will have more of an impact in 2004. And a lot depends on how the investment markets do in the next 18 months."
Bernie Morgan, acting chief executive of the Association of Charitable Foundations, said that other trusts and foundations were in the same boat.
"Many will have the same type of investments as Baring. Next year is when things will be begin to bite,