UK-based trusts and foundations are weathering the recession better than many other sectors, with nearly 75% predicting steady or rising income levels over the longer term and two-thirds planning to maintain or increase their level of grant-making.

This optimistic outlook is despite experiencing short-term falls in the value of their investments.

The findings come in a new survey by the Association of Charitable Foundations, whose members manage well over £30 billion in investments and provide about 10% of the annual income for the voluntary sector.

“Trusts and foundations exercise very prudent financial controls and plan for the long term, and it is clear that this has enabled many of them to lessen the impact of the downturn,” said David Emerson, ACF chief executive.

“Steps taken included reducing reliance on equities prior to the recession, and increasing investments overseas – which has led some to report a rise in income due to the weaker pound.”

Over 75% of respondents have reviewed their investment strategy as a result of the credit crunch, with a significant number commenting that they would continue their current strategy but keep it under review.

For this year, 36% of ACF members expect to maintain current levels of grant-making, with 9% increasing these levels. Looking forward, 15% anticipate higher grant-making in 2010, and 38% plan to increase grant-making over the longer term.

What some respondents do expect are changes in the nature of the grants they make next year: 44% are likely to give fewer grants; 27% believe their grants will be smaller, and 23% think they will be given over shorter periods.

Trust and foundation assets have been hit by the downturn, but the picture is more promising than in many other sectors.

While 75% of respondents reported a significant decrease in investment value over the past 12 months, 40% said that share dividend income had remained steady. Only 12% foresee a continuing decrease in income over the longer term.