Like thousands of savers, Sir Bill Castell rushed to the bank last autumn in a panic. The chairman of the Wellcome Trust, the world's second-largest medical charity after the Bill & Melinda Gates Foundation, switched a large sum of money from Royal Bank of Scotland to HSBC at the branch next to his office on Euston Road, then panicked when he didn’t immediately receive a statement to confirm receipt of the funds.

“They were heady times," Castell confessed. He is calmer now, not least because he has had a Bloomberg screen installed in his office so he can track the market.

The Wellcome Trust, which has a £13 billion endowment it uses to fund projects aimed at improving human and animal health, has also been quick to react.

Since late last year, it has sunk £1 billion into defensive, “mega-cap” equities — stocks with a market value of more than $50 billion (£30.6 billion) — after selling £5 billion of shares between 2006 and 2008.

That it can find a safe home for its money in a recession matters. Its philanthropy, which so often takes place behind the scenes, has taken on a greater importance when other forms of funding have dried up. Castell, who once ran medical diagnostics group Amersham, which was sold to General Electric, reports a heavy volume of applications for its grants.

This year it has doled out £590m — down £30m compared with 12 months earlier — to spend on projects such as discovering the causes of asthma, malaria and unravelling the human genome.

Wellcome’s endowment stems from the fortune left by pharmacist Sir Henry Wellcome when he died in 1936. It was topped up by £12 billion in just over a decade as the foundation sold its holding in the Wellcome drugs company, now part of Glaxo Smith Kline, from 1986 onwards.

Instead of cutting its spending, Wellcome decided two years ago it would set aside an extra £500m special dividend for projects such as the £500m UK Centre for Medical Research & Innovation in partnership with Cancer Research UK and University College London, which will spring up behind the British Library by 2013 and is vital for creating jobs.

“We felt we had underspent the endowment in recent history and this was a better way to make sure we balance current expenditure against future expenditure,” said Castell.

More money is also going into research in Africa and India. Castell keeps a model in his office of the floating laboratory that Sir Henry Wellcome moored on the Nile.

Philanthropy is a growing hub for research and development in Britain. The charitable expenditure of the top 100 family foundations was worth £1.2 billion in 2007, having gone up 10% on a year earlier, according to a Cass Business School report. That compares with a 33.5% increase in the US to $7 billion, although this is modified to 8.4% if a giant gift from Warren Buffett to the Gates Foundation is stripped out.

Cathy Pharoah, the report’s author, thinks such giving has fallen in the past two years, although some trusts, such as Wellcome, Lord Sainsbury’s Gatsby Foundation and the Leverhulme Trust, have asset bases that can cushion them in a recession.

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