The recession is forcing one third of charities to think about the future, many are facing diminishing incomes and donations at the same time as rising demand.

The Charity Commission has recently published its third survey examining how charitable organisations are coping in the current climate, and urged charities to consider teaming up to survive.

9% of charities polled had considered merging or collaborating with others, 21% had tried to reduce admin and energy costs whilst 18% had boosted fundraising efforts. The recession has forced 7% of all charities polled to delay or cancel projects - 23% of those with incomes of £1 million or more.

Larger organisations are also the most affected by a rising demand for their services, 20% of all charities reported an increase in demand over all.

Chairwoman of the Commission Dame Suzi Leather said: "Charities continue to be challenged by the effects of the economic downturn. It is a testament to the resilience of the sector that many trustees are thinking positively about the future, but we would advise charities that hoping for the best should not prevent them from preparing for the worst.

"We still believe that more trustees should be taking a long, hard look at their charity and asking what they can do to protect its work and beneficiaries. In particular we want to see more charities considering whether they could work collaboratively."

69% of charities reported a drop in revenue from investments over the past year, 31% a decrease in grants and 26% reported a drop in income from fundraising activities with a similar number expecting to see a reduction in income from legacies. However, 71% of charities said they were optimistic about the next 6 months.