There are finally some signs emerging that the economy is picking up. But it isn't happening fast enough for many worthy charities, especially those which rely on public funding. State and local governments have been especially hard hit by financial strains, so many purse strings have been tightened.

With the economy in the doldrums in recent years, charities have suffered. People out of work have naturally been less eager to make charitable donations, and those who have remained employed have simply felt less flush with cash and therefore often less generous. Some likely conserved their money in case they suddenly needed it.

An article from Chicago Business summed up the situation locally, saying, "Illinois non-profit organizations are bracing for cuts in state funding that, they fear, will result in service cutbacks and some outright program closures. Some 31% of Illinois non-profits reported decreases in government funding last year, according to a study by the Donors Forum of Chicago, an association of area grantmakers. In 2004, even as the economy improves, non-profits could suffer more."

Another article, from Michigan, notes that the Oakland County Food Bank is reporting donations down nearly 9% from last year's levels. In San Diego, the Salvation Army has been struggling, partly due to grocery store strikes. Not every charity is suffering, though. In Massachusetts, for example, some organizations have been getting fewer, but larger donations.

Still, there are some important things for us to keep in mind:

  • When an economy is in a slump, more people than usual are in need of help. This puts a strain on the organizations and institutions that serve those in need.

  • These same organizations also often feel a greater pinch during tough times. So if there are some charities you believe in strongly, you might want to think twice before putting off donating to them until next year. (Perhaps at least contact them to see how they're faring.)

  • One way to donate money especially effectively is to look for some charitable organizations that get a big bang for your bucks. We invite you to learn about five organizations that have knocked our socks off. We've raised money for them in the past and are doing so again, in our annual Foolanthropy drive.

Our five featured charities: feed the hungry while teaching job skills, invest in social entrepreneurs who are transforming the world, give gifts of plants and animals to families in need, lend money to women who want to lift their families out of poverty by starting small businesses, and bring clean water to areas where people are dying from the lack of it.

Consider at least taking a few minutes to learn more about them and their impressive work.