Nearly half of charities plan to decrease expenditure in the next 12 months with many planning a decrease in workforce and/or services, according to NCVO's 20th quarterly Charity Forecast.

The survey of senior charity staff from 256 NCVO member organisations found that 46 per cent thought the overall situation for their organisation would get worse in the next 12 months, an overall dip of five per cent on last quarter. In addition some 47 per cent advised their organisation planned to decrease its expenditure over the next year, 4 per cent up on last quarter. While the change is slight, this is the first dip in net confidence levels noted in the past year.

The forecast indicates that both jobs and services could feel the brunt of this drop in confidence levels. The percentage of respondents advising their organisation would be decreasing staff numbers in the next year, has risen from 22 per cent in September to 32 per cent in December. And the proportion of staff advising they would cut services increased from 11 per cent last quarter to 21 per cent in this.

Sir Stuart Etherington, CEO of NCVO (pictured) said: "The responses to our member poll clearly indicate times are still tight for charities, squeezed by decreasing income and increasing demand. Many respondents identified uncertain future funding arrangements as inhibiting their ability to plan their activities. Finding money to fund core costs is still a challenge even for those organisations whose work is otherwise adequately funded.

“Charities are immensely resourceful when it comes to dealing with tight budgets, but further cuts could seriously undermine the ability of many to support the most vulnerable people in society. Charities keep reserves to see them through rainy days, but it’s been raining for a long time now.”

However, as with forecasts since 2008, senior figures' confidence in their own situation remains significantly higher than their confidence in the sector as a whole, with 91 per cent believing economic conditions for the wider demographic will be negative in the coming year. Likewise confidence in the UK economy remains at a steady low with an 84 per cent negative outlook.

Looking more positively, there remains a percentage of senior figures looking to increase expediture, staff numbers and services (34, 22 and 41 per cent respectively). The latter figure shows that there are still almost double the number of people indicating their organisation will increase services as indicating they will reduce services.