Finance News: CAF: trusts' grants still in decline

Grant making from the UK's largest trusts is still in decline because of the impact of the stock market crash, according to research by the Charities Aid Foundation.

The investments of the nation's biggest grant givers endured an asset-sapping three-year period of negative returns between 1999 and 2002.

And researchers at CAF say that the hit taken by trusts and foundations is likely still to be affecting the sector in the shape of reductions for grants.

The real-terms investment income of 30 of the UK's largest trusts fell by 11.6 per cent from 2000/1 to 2001/2, and a further 5.3 per cent in 2002/3.

This contributed to a drop in grant making from £242m in 2001/2, to £218m in 2002/3.

The CAF team says that the additional "steep fall" in investment returns in 2002/3 will have produced another retrenchment in grants to the sector in 2003/4.

"Our figures show that market performance has a significant impact on charities' income from trusts and foundations," said CAF director of research Cathy Pharoah.

"After those recent marked drops in the value of investments and in grant making, trusts and charities will be watching anxiously to see if the fall is now bottoming out.

"There is no obvious or easy way in which charities can make up for any shortfall in the support given by trusts and foundations."

New research by CAF, due to be unveiled at the body's annual conference tomorrow, also shows that the level of support given by charitable trusts to different causes varies enormously.The most popular causes are social care charities which receive 19 per cent of all funding. Health follows closely with 16 per cent, while education organisations get a tenth of all grants.

But other causes such as civil rights, community development and international issues receive "tiny amounts", according to the research. The reasons for the huge variations are not clear, say the researchers.

But Pharoah warned that foundations will face a choice if income falls further: "If, in the future, trusts have to make cuts in their expenditure, they will have to choose between cutting grants to areas that already receive scant support, or make inroads into core areas that they already support, such as social services."

But if the sector as a whole is still suffering from falling grants, the largest charities seem to be thriving.

Figures from Charities Aid Foundation's 2004 Charity Trends show that the top 500 fundraising charities saw their voluntary income increase by 7.5 per cent in 2002/3.

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