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A major community trust will slash its spending after losing hundreds of millions on international finance markets.
The ASB Community Trust, which supports community groups in the health, education, cultural, heritage and sporting sectors in Auckland and Northland, has lost $200 million since October as a result of the global meltdown.
The trust, which has 60 per cent of its assets invested in international property, bonds and equity, was worth $1 billion a year ago but is now struggling with losses chief executive Jennifer Gill says are the largest in its history.
"Broadly, where we've taken the biggest losses has been in global equity. But what's happened is everything has been hit both in New Zealand and offshore, which is the abnormal situation that all investors have found themselves in."
The trust was formed in the restructuring of the trustee savings bank sector in the 1980s. The trust received $177 million to invest for community projects and initiatives.
It has given out $645 million in grants since 1988 - $61 million of it last year.
Ms Gill said because of the uncertain financial climate the trust wouldn't be in a position to confirm the 2009/2010 funding budget by March, when it would usually do so, and would instead wait until September, when conditions are expected to be much "tighter".
"Basically we're going to give ourselves six months and hope that the markets will start picking up and then we'll make our major decisions in the second half of the year."
That meant there would be a restricted amount of money available in the first half of the year, and instead of two funding rounds there would be only one.
Major building projects would not get the go-ahead from the trust, either.
While the trust had faced bad patches before - most recently between 2000 and 2002, when its portfolio value fell after the tech bubble burst - there had been no warnings of what would play out in 2008.
"I guess we always knew there would be a bad year but this is a year that nobody predicted - the Reserve Bank, the best economists in the world ... nobody predicted this.
Ms Gill said the trust still had substantial investments. She encouraged community organisations to apply during the first round for help, as staff would be able to give applicants information about whether their project was a priority for the second round.
The ASB trust's predicament has left John Bain, chairman of the Northland Emergency Services Trust, worried about how community organisations will compete for the dollar.
"It's one of those times where we're all in a desperate situation," he said.
Last year, after funding fell through, the ASB trust "bailed out" the Northland trust, which funds the region's two rescue helicopters to the tune of $448,239. This year Mr Bain is looking for $1 million.
Counties Manukau Sport had asked the ASB trust for $387,000, but after meeting its staff decided it could cut a pilot programme worth $200,000.
Chief executive Russell Preston said Counties Manukau recognised tough times meant you couldn't always get what you wanted.
"We recognise that our partner's in trouble and so we've asked, 'How can we support them?'"
Sharp decreases in gaming revenue means the community sector will be squeezed by a drop in grants from gaming trusts as well.
Phil Holden from the Lion Foundation, which distributes the profits from many pub poker machines, said because spending had been down since May, the total money available for grants was expected to drop from $47 million to $36 million.
