Charities could face a funding shortfall of £2.3bn as a result of the economic downturn, according to research from PricewaterhouseCoopers, the Institute of Fundraising and Charity Finance Directors Group.

The report, 'Managing in an economic downturn' says that charity income is stable at present although it suggests that rising costs and a fall in income could cost charities up to £2.3bn. A survey for the report, of 362 charities, revealed that 45% expect income from trust, lottery and foundations to fall next year, and 51% expect corporate giving to fall. A further 38% said they expect legacy income to decline.

Lindsay Boswell, chief executive of the Institute of Fundraising, said, “Even in the best of conditions, charity fundraising remains a challenge – and so it is vital for individuals to keep on giving to their favourite causes.”

The report also says that charities have several months to prepare themselves for the impact of the recession. The report found that 71% of respondents had already taken action in response to the current economic climate and that 62% of charities expect to increase fundraising activity in the coming months.

Keith Hickey, chief executive of the Charity Finance Director’s Group, said, “In this quiet before the storm charity finance directors will need to show real leadership and work proactively to guide charities through uncertain times ahead.”   

The December edition of the Philanthropy UK Newsletter will look at the outlook for philanthropy in a recession.