According to a recent report by Reuters AlertNet, international aid agencies have been forced to scale back their operations due to the global economic downturn and falling donations, and face the possibility of having to take more extreme measures in 2010.

Although some countries and regions are showing signs of recovery, charitable giving around the globe has generally been down. Indeed, a recent Bridgespan Group survey found that 80 percent of charities reported revenue declines, up from 52 percent a year ago, while 44 percent said their current financial situation is worse than it was six months ago. However, it is the combination of lower giving and other aspects of the economic crisis (exchange rate pressures, volatile inflation in many countries, fluctuating currency rates, and reduced income from interest on reserves – that is causing aid agencies so much difficulty.

The crisis has forced many agencies to cut staff, scale back projects, and consider either merging with another group or closing their doors. Indeed, even as financial markets rebound and the global economy shows signs of recovery, international relief groups are preparing for tougher times ahead.

I know some foundations have either frozen what they’re doing or are cutting back. I don’t know if we’ve seen the worst yet, either. It’s a real crunch because the economic decline isn’t local; it’s global. And there’s a greater need for our services at the same time as our resources are shrinking.

View a previously written post by Mouli Cohen about philanthropy