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Funding foundations feel the squeeze

Many children's and youth organisations rely heavily on charitable foundations to help fund their work. As the recession takes hold, Mathew Little investigates to what extent this financial support will be cut back.

One barely mentioned result of investment bank Lehman Brothers' collapse last September was the severing of funds to its charitable foundations. In 2006, The Lehman Brothers Foundation Europe distributed more than £1m to good causes in the UK, mainly to health and education projects for children and young people from disadvantaged backgrounds. Though the foundation will honour its existing commitments, the bankruptcy of its parent company means it has made its last grant, and affected organisations will have to do without the help of 8,000 of the bank's volunteers.

Financial wounds

The financial crisis has inflicted gaping wounds on other parts of the corporate sector noted for their charitable endeavours. Northern Rock was considered an exemplar of good practice for its annual gift of five per cent of pre-tax profits to its charitable foundation. In 2006, this funded grants worth £27m to charities and arts organisations in the North East, including projects that benefited children and young people such as Northern Learning Trust. In 2009, a nationalised Northern Rock, under the settlement agreed by Chancellor Alistair Darling, will give grants worth just £11.3m, a sum that is likely to be repeated in 2010.

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