Remember ME - You Me and Dementia

Thursday, February 12, 2009

UK government aids struggling charities, as donations fall

The British government has pledged $42.5 million ($63.6 million) to help charities ride out a squeeze on their finances amid an economic downturn that is boosting demand for their services.

Charities of all shapes and sizes have started to see donations fall as the credit crunch sends the British economy into recession. Many are considering cutting jobs and scaling back programmes.

Some have experienced a disappointing response to appeals for funds for humanitarian emergencies from hunger in East Africa to cholera in Zimbabwe.

John Low, chief executive of the Charities Aid Foundation (CAF), which helps charities raise and manage money, said those that rely heavily on donations from the public are feeling the pinch most.

"But they're not seeing a collapse. It is either flat or the beginning of decline, and it just feels for everybody like the phoney war. We know it's coming," he told AlertNet.

In a survey of 322 charities carried out by CAF in January, 41 percent said they had received less funding than budgeted for in the past three months, with their income falling by 22 percent.

Almost half - 49 percent - reported no significant change in income. But half said they expect their total income to decline over the coming 12 months.

Meanwhile, 51 percent of those offering services to help people cope in tough economic times
- from financial advice to help with housing, jobs and managing stress - have seen demand increase in the past three months.

The government's aid package is targeted at groups that provide employment advice, mental health and family support services in the poorest parts of Britain.

It includes £16.5 million to help at least 3,000 organisations "modernise" by facilitating mergers, partnerships and sharing administrative functions, £15.5 million in grants for smaller charities working in the most deprived communities, and £10 million for a scheme to create volunteering opportunities for the unemployed.

"The best of the British spirit is the way we pull together when times are tough. And it's Britain's charities, voluntary groups and social enterprises that so often make that happen," Liam Byrne, minister for the Cabinet Office, said in a statement.


Charity leaders welcomed the plan, but said it was less than they had hoped for and more would be needed.

"It targets real need and provides capacity-building support, but more will undoubtedly be needed as the recession unfolds," Stephen Bubb, head of the Association of Chief Executives of Voluntary Organisations, told Third Sector magazine.

The new fund is just a fraction of the £500 million sought by charities at crisis talks three months ago, and less than half of a more recent request for £100 million to keep essential services afloat, according to the Guardian newspaper. It also says one in three charities is expected to lay off staff in the coming months.

Besides declining donations, British charities are suffering from a slump in the value of their assets, and some have had to cancel projects after losing deposits in failed Icelandic banks.

CAF's Low said aid agencies operating overseas have also been hit hard by the devaluation of the pound, which they had not planned for, leaving them with little choice but to raise more money to fund planned programmes or cut back their activities.

CAF has launched a confidential financial crisis helpline that will offer guidance to worried charity leaders about how to get through the economic downturn by cutting costs and rebalancing their books.

Large international agencies may be better equipped than small domestic charities to withstand a squeeze on their finances in Britain thanks to more diversified income sources and stronger capacity to manage their money, Low said.

But the need for aid in poorer countries is also likely to increase as economic growth and remittances are hit by the global financial crisis, poverty rises and struggling governments cut humanitarian and social spending.

"The problems in Darfur haven't changed one iota because of Western bank failures," said Low. "If anything, it's just gone off the agenda. These are becoming hidden problems."


Forget yourself for others, and others will never forget you.

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