Decimated fortunes, bankruptcies, scandals and job losses are just some of the well-known victims of the recent market rout.

But the fallout is spreading to charities as the generous instincts of wealthy philanthropists who fund them take a battering.

While watching their fortunes dwindle, the well-to-do are much more choosy about which causes to support. Even as markets begin to bounce back, it could take a while for benevolence to return on a large scale.

Figures show that in 2002, foundations, individuals and corporations donated $240 billion in the United States. While that was one per cent up overall on 2001, it was a half per cent down when adjusted for inflation.

And it represents a huge shift from the heady days of the 1990s when charitable donations leapt 50 per cent over the course of the decade, according to banks which track such funds.

It seems that even the world's wealthiest man, Microsoft Corp chairman Bill Gates, is feeling the pinch.

The Bill & Melinda Gates Foundation paid grants of $1.157 billion in 2002, a one per cent increase on the year after a 15 per cent rise in 2001, according to its annual reports.

"It's been difficult for foundations and individuals to maintain the level of giving because of the impact of the markets on their investments," said Patricia Surak, director, Foundation and Corporate Relations at Medecins Sans Frontieres (MSF) (Doctors Without Borders).

"Today, it seems somewhat insecure. Some foundations say they can't give as much as last year, others say they can't give at all and others can manage only a small increase."

MSF was forced to dip into its own reserves last year when donations disappointed. It has made conservative projections for its 2003 budget amid doubts whether altruism will rebound with the markets.

A big reason why donations have not dropped more steeply is that many givers have honoured multi-year pledges, but the worst market downturn in decades has blown a big hole in endowment income, meaning donors simply have less to give.

"It will be some time before people feel like they did in the 1990s when there was a dream that anything was possible," said Marlene Hess, head of Global Philanthropic Services at JP Morgan Private Bank. "The dreams will come back but they will not have the same kind of swagger."

Private banks that employ people specifically to advise the wealthy on how to give it away insist their clients are just as willing as ever to dig deep for a good cause.