Charities: Many paths to money when times turn hard: Charities are finding alternative methods for raising funds in the recession. Joanna Gibbon reports

AS THE recession continues, charities are finding themselves pinched at both ends. With dwindling donations from individuals, businesses and grant making foundations as well as increasing demands on their time and resources - especially in housing, health and the youth fields - many are trying new avenues of fund raising.

About 35 of the country's larger charities, with high profiles and the ability to research and grab new opportunities, have done well out of the affinity card. 'During the last two years the card has taken off - although overall it is a drop in the ocean. It accounts for a very small proportion of charitable giving,' says Neil Jones, at the Charities Aid Foundation, which advises individuals and companies seeking to give money to charities.

Mencap, the British Heart Foundation and the Imperial Cancer Research Fund have all benefited from the Leeds Permanent Building Society's affinity credit card which has raised over pounds 3 million since 1988. Customers can decide whether to spend pounds 5 of their annual credit card charge on one of the three which also receive 20p for every pounds 100 spent with the card.

No one who has read a newspaper or magazine in the last two years can have failed to notice the plethora of advertisements encouraging people to write wills. Only about 25 per cent of the population make a will, and as the average charitable donation, via a will, is thought to be pounds 15,000 it is not surprising that many voluntary organisations have jumped on the bandwagon.

'Charities have managed to get a huge amount of money from a very small sector of the population - they feel there is a huge number of people they could tap,' says Mr Jones. The advertisements usually offer advice about making a will and only mention the charity at the end.

To the large charities, bequests make up a large part, sometimes half, of their income. Last year, the RNLI received pounds 31m in bequests.

By percentage, most is given to health and medical research and least to the arts, welfare and education. However, experienced fundraisers realise that bequests, by their nature, are an unreliable source of income.

For smaller charities there is some comfort in the CAF's recent Individual Giving Survey which shows that most people give to their local charity first, then to a national organisation and thirdly, to an overseas agency. Some large charities have local branches and now medium-sized charities are following suit. This month Motability, which provides adapted cars and powered wheelchairs to disabled people, is starting a local branch in Leeds to cover the northeast of England. Since its founding in 1977, Motability has been based in London; Leeds is its second office out of town, the first being in Manchester. The long-term aim is to redirect the central office's fundraising role into a network of regional offices.

Motability's decision is partly because traditional sources of funds - company trusts, charitable foundations and company donations - have shrunk recently. 'Motability has a backlog of grant applications, so we have do something fundamental with our fundraising,' explains Joanna Singleton, who is establishing the Leeds office. (She is on secondment - another form of charitable giving which more businesses are favouring - from KPMG Management Consultants.)

Ms Singleton intends to involve local companies and groups in fundraising for a specific regional need instead of asking them for a donation. 'Car dealers have a powerful incentive: we need to raise money so that we can buy and adapt more cars for local people,' she says. In June, Motability's purchasing power accounted for 5.9 per cent of new UK car registrations, and it will soon put its 300,000th adapted car on the road.

For organisations more closely aligned to social welfare there is a source of money being offered by local authorities who are contracting out certain services that charities can provide. Some charities disagree ideologically with this move but for others it is a growing source of income.

Another avenue of rapid growth is the charity shop; there are about 5,500 of them in Britain. Some feel this reflects a new attitude among givers; they want a tangible return for their donation. Fifteen charities have over 100 shops each but this has not prevented smaller local charities from doing well.

The charity shop's advent has not delighted everyone: some small retailers have accused them of stealing customers by selling bought products, while they also enjoy tax benefits.

The Imperial Cancer Research Fund, which with 470 shops is second to Oxfam and its 870 shops in Britain, intends to start selling bought goods in September - writing paper and small items. 'We are not competing with the retailers because the vast majority of our stock will always be donated - things people don't want but we can sell,' says a representative.

Joining forces with another charity for a fundraising event is not a new idea but the Alexandra Rose Day has found itself in heavy demand during the last few years. The Rose Day is a chance for small or local branch charities to join in a flag day that would be difficult to stage on their own.

The joining charity supplies the street collectors, the Alexandra Rose Day supplies the paraphernalia and advice, and the charity receives 80 per cent of the takings. Two years ago, 300 charities participated and this year the running total is 700. Last year pounds 338,000 was shared between 500 charities.

Looking ahead, many charities fear that a national lottery will threaten their fundraising, but the Association of Charitable Foundations wants them to comment on how the proceeds can be distributed in the sector.

Charities wanting to comment to the ACF inquiry committee should write before 31 August to Mark Lattimer, Radius Works, Back Lane, London NW3 1HL.

(Photograph omitted)