Charities across Britain are being forced to cut staff and services following a dramatic fall in donations from businesses and the general public, The Times has learnt.

One in three organisations expects to lay off staff within months, with smaller charities fearing for their survival. Money held by the sector has fallen by 13 per cent over the past year.

The Wellcome Trust, Britain’s biggest charity, which supports medical research, invests heavily in property and hedge funds and has seen the value of its investments fall from £15 billion to £13 billion.

The NSPCC is already laying off staff and beginning to cut services. Scope, the disability charity, said falling property prices and the slowing housing market had cut the value of bequests dramatically.

The Woking and Sam Beare hospice charity said that it would have to decide within months whether it could afford to keep its two hospices open.

A survey to be presented to ministers early next year indicates that the situation is worsening by the week. Charity chiefs are demanding a £500 million emergency bailout fund from the Government.

Central government grants have not been affected, but charities have seen their legacy incomes from wills cut by up to 50 per cent. Corporate donations have fallen by 20 per cent. Ministers have promised an action programme to help those most in need, but no extra cash has been pledged.

The interim survey of 260 large charities by the Association of Chief Executive Officers of Voluntary Organisations shows that investments have fallen from £269 million to £235 million in the past 12 months. Demand for services is up 18 per cent as the voluntary sector has to support families reeling from unemployment, but 50 per cent of charities claim that they cannot meet these demands.

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