Fundraising News: Funding blow sparks crisis fears

John Plummer

Charities are on the verge of a funding crisis caused by changes to three major grants programmes, according to one of the north-east's biggest grant-making foundations.

Small charities in poor areas are likely to be hardest hit, with the Community Foundation serving Tyne and Wear and Northumberland claiming that grants to local charities could crash from £64m now, to less than £10m in 2006.

The triple funding blow is caused by the phasing out of the Single Regeneration Budget, changes to the European Social Fund and the merger of the Community Fund and the New Opportunities Fund.

"The north-east will be badly affected because it has been so successful in attracting money, but it is a national problem," said George Hepburn, chief executive at the foundation, which commissioned Bruce Reed, of European Economic Development Services, to calculate the impact of the changes.

Reed estimates the region's voluntary sector will lose 10 per cent of its overall funding. Lottery funding alone is expected to fall from £14m to £5m each year and be given mainly to big organisations.

Hepburn said: "The priorities for the Big Lottery Fund haven't been published, but it's pretty clear there will be less general funding and more for the hot topics of the day."

St Chad's Community Project in Gateshead, which helps children from disadvantaged areas, faces an uncertain future when its £500,000 European grant expires next year.

"We may lose preventive services with the loss of up to 40 jobs," said director Jean Burnside.

The Northern Rock Foundation, the region's biggest grant-giver, is braced for a flood of extra requests for money.

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