More than half of charities with annual incomes of £250,000 or less have faced financial difficulties in the past two years, according to new research by the Charity Commission.
The regulator surveyed 2,515 small charities for its new report, Strength in Numbers, published today.
The report says 54 per cent of respondents had "faced challenges in relation to maintaining their income flow" in the past two years.
The report also shows that 45 per cent of the charities said they had collaborated with another charity in the same period. Of these, 73 per cent said they had seen growing demand for their services before deciding to collaborate.
Seventy-five per cent of those that had collaborated said they had "faced challenges in managing organisational growth", and 54 per cent said they had faced funding challenges.
Eighty-two per cent said the collaboration had been a success.
The report shows that the most common form of collaboration was the informal sharing of information and ideas. Joint bidding for contracts was the most likely form of collaboration to run into difficulty, it says.
In a statement, Dame Suzi Leather, chair of the commission, said: "Some charities haven’t collaborated because they have never been approached.
"So don’t wait. Be the one to make the first move, and increase the sense of local people working together for local causes."