Charities 'fear closure' due to cuts and donation fall

One in six UK charities questioned for a survey say they fear they may have to close in 2013 due to public spending cuts and falling donations, the Charities Aid Foundation has said.

The poll of 252 senior charity workers also found just under half of their organisations have been forced to dip into reserves to stay afloat.

Over a third have said they may be forced to cut services or jobs.

The Cabinet Office said the charity sector "cannot be immune from cuts".

There are more than 160,000 charities in the UK.

Almost all of the 252 charities questioned for the CAF said generating more income was going to be their greatest challenge in the coming year.

Hannah Terrey from CAF said it was small and medium-sized charities, rather than large ones, which were feeling the pressure.

"Those [are the ones] that are in your local community doing vital things, providing social care, hospices, working with children and vulnerable young people - they may be the ones that are feeling the effects now."

The survey was completed online by charities of differing sizes by polling group Research Now.

• Some 40% of those questioned worry that they will be forced to close if the economic situation does not improve

• A quarter have already been forced to cut frontline services and staff

• About 80% believe that the economic situation is the greatest threat to UK charities

• Nearly three-quarters believe that charities are unable to fulfil their goals because of reductions in donations or government funding

The foundation is calling on the public to support charities through regular giving, regardless of how much time or money people can give.

Ms Terrie said said CAF and the National Council for Voluntary Organisations were urging charities to consider ways in which they can share resources and do things as efficiently as possible "to make the money that [they] do have... go as far as possible".

CAF is also lobbying the government to modernise and promote the Gift Aid scheme and payroll giving, so donations go further.

The Gift Aid scheme is for gifts of money by individuals who pay UK tax, and allows the charity to reclaim the basic rate tax on the donation.

John Low, chief executive of CAF, said tough economic times meant the public had less money to donate to charities.

He added: "This combined with significant public spending cuts and increased demand for charity services is having a shocking effect on many charities, calling into question their very viability.

"Many organisations are having to dip into their reserves, cut vital frontline services and some are even concerned about whether they can survive in these toughest of times.

"Charities of all sizes play an essential role in our society, providing social care and education as well as helping some of the most vulnerable people in our communities."

Investment help

A report last month found that donations to charity have fallen by 20% in real terms in the past year, with £1.7bn less being given.

The number of people donating also fell - as did the amounts they gave, from an average of £11 to £10 a month.

A Cabinet Office spokesman said "We know it is a very challenging environment for charities, especially for those previously dependent on taxpayer funding, but the sector cannot be immune from cuts."

The spokesman said the government was "committed to strengthening the sector through programmes such as the £10m Investment and Contract Readiness fund and the £65m Advice Services Transition Fund".

"We have introduced new ways for the sector to finance itself through Big Society Capital, capitalised with £600m, giving charities access to affordable loans and investment to grow, so they can do more," he added.