One in four charities has suffered a fall in donations in the last year as the credit crunch bites, according to the Charities Commission.

The fall in donations comes as demand for services offered by charities is escalating. One in five charities say they are under pressure to deliver more services than a year ago. Those offering advice on debt, mortagage arrears and relationship counselling are most under pressure.

The survey also found one in 12 of the charities which reported a decrease in donations said they have already made redundancies as a direct result.

The Charity Commission contacted a representative sample of 500 charities between September 17 and September 30 to ask them about the conditions they face.

Since the survey was conducted two charities have revealed they have millions of pounds tied up in Icelandic banks. Naomi House, the children’s hospice, and Cats Protection have both urged the government to make good their losses of £5.7 million and £11.2 million respectively. It is thought at least £125 million of charitable funds are at risk from the Icelandic crisis.

Dame Suzi Leather, Chair of the Charity Commission said it was a worrying time for charities.

“Charities, like many organisations at present, are facing a great deal of uncertainty, and for some the situation could get much worse. Even before last week’s problems with Icelandic bank collapses, some charities are really being squeezed by higher costs and higher demands for vital services,” she said.

“They will wonder how they are going to survive the current crisis whilst trying to continue meeting people’s needs.”

Leaders from the sector are meeting ministers to discuss whether a fund can be set up to help charities cope with the increased demand for services.

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