Charities Run Out of Money — Just When They Need it Most

March 17, 2009, The Independent UK— Charities and voluntary organisations are experiencing a damaging drop in funding at a time when the increasingly volatile economic situation will create a greater need for charitable work, a series of gloomy reports have warned.

Plummeting share prices, cancelled direct debit donations and a weak pound are seriously undermining the voluntary sector's efforts to provide relief at a time when the services that charities offer are in particularly high demand.

Figures released by the Charity Commission today show that more than half of all Britain's charities are now suffering as a direct result of the economic situation, up from 38 per cent six months ago, when the recession had yet to hit home.

At the same time, at least a fifth of all charities have seen an increase in demand for their services. Dame Suzi Leather, who is chairman of the Charity Commission, said the impact of the financial downturn on charities was now widening and deepening. "Some charities still face that double whammy of a drop in income as well as an increased demand for services," she added.

There are also growing concerns that the public has become less willing to donate as belts are tightened during times of economic hardship.

Rapidata, which handles more than four million direct debit transactions for the charitable sector, said cancellations of monthly donations "skyrocketed" after the collapse of Northern Rock last summer and that donations have continued to decrease since. Its latest figures reveal that direct debit cancellations in December were 67 per cent higher than the average pre-recession December.

Charities have lost an estimated £32.4m from cancelled subscriptions over the past 10 months, the company said. Direct debits account for about £2.5bn of private donations to charities each year.

Scott Gray, the managing director of Rapidata, said: "We've had a very close look at these figures and what they suggest is that the monthly cancellation rates during 2008 were so high that they were not likely to have been subject to the same factors influencing cancellations before the credit crunch hit."