December 23, 2012 5:27 pm

Charities hit by austerity measures

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Festive fare: a volunteer at a soup kitchen in New York

The woes of the global charity industry are deepening as donations – both smaller individual gifts and philanthropy – continue to contract as demand for the services of non-profit organisations keeps mounting.

Charity officials and experts harbour little hope for a meaningful recovery in 2013. Individual donations – the single biggest source of revenue for most charities – have shrunk sharply in many western countries. Bigger gifts from philanthropists and endowments have also slumped after the financial crisis took its toll on their assets.

The US Million Dollar List, which gathers information on donations of more than $1m, reveals that philanthropic giving in the US has contracted for five straight years, from a total of $43bn in 2007 to $11bn this year – the lowest since the list began in 2000.

“It’s still extremely tough for many non-profits,” said Melissa Berman, president of Rockefeller Philanthropy Advisors. “It’s hardest for grassroots charities close to hard-hit societies.”

The UK’s Million Pound Donors Report, compiled by the University of Kent on behalf of Coutts, the private bank, estimates that the total value of charitable gifts worth £1m or more fell for a second year running in the 2010-11 period to £1.24bn, the lowest since at least 2006-07.

Overall UK donations dropped 15 per cent in real terms to £9.3bn in 2011-12, the biggest drop in eight years.

Government austerity is also having an impact on large multinational organisations. Unicef, the UN children’s agency, estimates that its income declined 7 per cent to $3.4bn in 2012. While donations have remained robust – helped by strong growth in gifts from Asia and Latin America – many states have had to trim contributions.

“Government donors are striving to protect contributions to Unicef core resources, though a few have had to make drastic cuts due to budget crises in their own economies,” it said.

In some countries, particularly the UK, charities have also been hurt by a dependency on public sector outsourcing contracts. These contracts have been among the first to be cut or cancelled altogether when austerity bites.

“This was a difficult year, and I think 2013 will be another difficult year,” said Ben Kernighan, deputy chief executive of the National Council for Voluntary Organisations. “It’s a pretty grim picture in terms of income.”

Even charities that have continued to enjoy healthy finances have had to contend with increased demand for their services.

City Harvest, a New York charity that collects excess food from restaurants, grocers and farms and distributes it to hungry New Yorkers, estimates that the number of visitors to soup kitchens in the city is up 15 per cent since the financial crisis.

“We used to see adults, but early on in the recession we began to see entire families,” said Jilly Stephens, City Harvest’s executive director. “Many people in New York are really struggling.”

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