Charities will lag behind the rest of the UK economy in recovering from the recession, with the full impact of funding cuts yet to hit, according to a survey of charity leaders.

The National Council for Voluntary Organisations' (NCVO) quarterly Charity Forecast Survey shows 77 per cent of respondents believe economic conditions within the voluntary sector will be negative for the next year.

This is a small reduction of just 11 percentage points on the survey's most pessimistic figure from February 2009, when 88 per cent thought the sector economy would get worse.

By comparison, 62 per cent of sector leaders believe the wider economic conditions across the UK will be negative.

This is a 35 percentage point improvement on opinions from February, showing confidence in the wider economy is returning.

Stuart Etherington, chief executive of NCVO, said: "With donations already much reduced and the pressure on public spending, the voluntary sector is bracing itself for further, deeper cuts.

"Our economy may be starting to show signs of recovery but the voluntary sector is going to lag behind as these cuts take their toll.

"Fortunately, the vast majority of charities say they will maintain or even expand services proving they are able to adapt to the recession and prepare for what lies ahead.

"Their determination and commitment to the people they serve should be applauded and I encourage everyone to support their favourite causes in any way they can."

Pamela Ball, from Wigan and Leigh Council for Voluntary Services, said as part of her survey response: "The full impact of the recession will not be felt fully by the sector until the middle of 2010 as funding streams around worklessness end, a new government is in place and public spending is slashed."

Despite the recession, 93 per cent of charity leaders say they are planning to maintain or increase services to ensure greater demand for provision is met.

Three quarters of respondents (74%) expect to collaborate more in the next year while two thirds (62%) expect to compete with other organisations more.

Other findings from the survey include that 27 per cent of respondents expect to increase staff numbers in the next three months, 65 per cent expect levels to stay the same and just eight per cent expect to make cuts.

Two fifths (41%) of charity leaders plan to increase spending over the next year, 28 per cent expect to maintain spending levels while 31 per cent plan to reduce expenditure.

Last week (Dec 3) NCVO launched a national campaign backed by the Prime Minister to encourage people to give to causes they care about.

In the run-up to Christmas, the 'What Do You Believe In?' campaign will focus on the importance of small financial donations but will look at other aspects of giving in the New Year.

For more information on the 'What Do You Believe In?' campaign, visit: www.whatdoyoubelievein.org.uk

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