CHARITIES working in the poorest areas have been hardest hit during the recession and austerity, according to a new report.

The study, led by Durham University professor Tony Chapman, was part-funded by the Northern Rock Foundation, which gave £225 million to good causes in the North-East over nearly 20 years before the Newcastle-based bank, its sole funder, collapsed and talks with its successor, Sir Richard Branson’s Virgin Money, broke down.

Having charted the progress of voluntary and community groups large and small across the North-East between 2008 and 2014, the Third Sector Trends Study concludes most good causes have managed to sustain their work, despite enormous challenges and funding pressures.

But those in the poorest areas are four times more likely to have suffered “significant” loss of income in the last two years, compared with richer areas.

Prof Chapman said: “Charities have borne the pressures of austerity better than many expected over the last five years, but those which are based in the poorest areas are definitely struggling more to maintain funding than charities in rich areas: this is a matter of real concern as they generally deliver to the most needy.”

Penny Wilkinson, chief executive of the Northern Rock Foundation, hopes the study will help policy makers and funders “make informed decisions about where and how to fund and support voluntary organisations in the future”.

Other findings include: medium-sized organisations with an income of between £50,000 and £250,000 have been hardest hit; voluntary groups are losing contracts and increasingly relying on grants; and only 16 per cent are actively engaged in bidding for or carrying out contract work.

Excluding small organisations such as Scout groups, there are about 6,900 voluntary and community groups in the North-East, more than half of which have an income of less than £50,000 a year.

Collectively they have about 36,000 full-time equivalent posts, about 3.1 per cent of the region’s jobs, and 149,000 volunteers.

Virgin Money has created its own Foundation, which will give up to £8 million to good causes across the North-East over the next four years, including £4 million-worth of fines extracted from misbehaving banks and promised to the Foundation by the Chancellor last December.