Donations to charity are down 20% as cash-strapped consumers struggle to make ends meet.

The total amount given to charities by people across the UK fell from £11 billion to £9.3bn last year, the biggest drop in the survey's eight-year history, according to the UK Giving 2012 report.

Charities are hoping donations will bounce back, especially at Christmas. Paul Rees, executive director at the Charities Aid Foundation, says: "There has never been a better time to support the causes you care about as charities across the UK are facing ever increasing demands for their assistance, at the same time that Government funding is being cut and donations are falling."

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According to recent research from mutual society Foresters, when it comes to charitable giving Scots are increasingly community-conscious. The average charity donation in Scotland in 2012 is already higher than the national average, yet giving is set to rise even more, with an estimated £95 to be given in 2013 (£17 more than in the UK as a whole).

More than one-quarter (26%) of Scots are already involved in helping a charity in their community, a rise from 20%, and Scots gave an average £83 to charity in 2012, £14 more than the national average.

More than half (56%) will put money in a collection box, while 59% are prompted to give to charity when a cause has a specific meaning to them.

In addition, 65% of Scots support charities by giving unwanted items to charity shops and 76% will give money or sponsor their colleagues, friends or family, both figures well above the UK norm.

Stephen Dilworth, UK membership director of Foresters, said: "It is fantastic to see that, despite the unstable economic situation, people in Scotland are continuing to give more than the national average to charity, and hope to give even more in 2013."

Gift Aid

If you are a UK taxpayer you will have paid tax on any money you give to a good cause. But if you Gift Aid the donation, the charity can claim back the tax at the basic rate of 20%. So, if you donate £100 to charity through Gift Aid, the tax clawback will boost the donation to £125 and it doesn't cost you anything extra. Anyone who pays tax at the higher rates of 40% or 50% can claim back the difference between the higher and basic rates on the value of their donation through their self-assessment tax return.

If you claim the age-related personal allowance, married couple's allowance, or tax credits, it's important to let HMRC know about any Gift Aid donations because the taxman will deduct the gift, plus basic-rate tax, from your total income and use the reduced figure to work out the value of your allowances or tax credits. A charitable donation could therefore increase your entitlements.

Give as you earn

You might be able to make a charitable donation straight from your wages or pension – as long as you pay tax through PAYE and your employer or pension firm operates a payroll giving scheme. Payroll giving is a convenient way to give money to a good cause, but the donation is also made before tax is deducted, so it costs you less.

Let's say you pay tax at the basic rate of 20% and make a monthly donation of £10. You would save £2 in tax (20% of £10) through payroll giving so the donation would cost you £8. If you pay tax at the higher rate of 40%, you would save £4, so a gift of £10 would actually cost £6.

Lend money to charity

If you cannot afford to make even a small donation to charity, why not lend money to a good cause instead? Switch your savings to the Charity Bank and you will earn interest on the money and get your cash back when you choose. In the meantime, the money is used to finance charitable projects.

Its Isa pays 2.05%, better than most high street banks.

Choosing your charity

Consultancy NPC, which monitors the sector, says: "Consider where your money will make a real difference to a group in need. Think creatively, as satisfaction can be gained by giving to charities that run projects in your area of interest.

"Consider whether you want to make a difference on your doorstep (for example, by supporting a local hospice) or contribute to achieving broader change (for example, by giving to a national campaigning organisation). Then do some basic research, which is easy using the NPC website or the Charity Commission's site."

Dan Corry, chief executive of NPC, said: "Everyone is feeling the pinch this year, so we're urging people to put some extra thought into their Christmas donation."

Invest in village entrepreneurs

Christmas gift vouchers with a difference are providing microloans to village entrepreneurs in developing countries, helping to lift families out of poverty.

Deki, established in 2008, offers gift certificates from £10, to be used on its website, where lenders can choose an entrepreneur to sponsor.

They can follow his or her progress and when the loan is repaid choose to reinvest, donate or get their money back.

Deki has a 100% repayment rate, and passes on 100% of the loan to the entrepreneur, using donations to support its network.

Founder Vashti Seth, a former film production manager who was inspired on a visit to India in 2006, says Deki has helped improve life for more than 8000 people in, Ghana, Nepal, Togo, and Malawi. which has had a particular interest for Scottish supporters.

Katey Tabner, 28, a social researcher from Edinburgh, has made nine loans to Malawian enterprises and says: "If the money comes back I would then reinvest it, and if there was money sitting in a pot I would rather put it in Deki than in a bank account.

"I see it also as a charitable donation so if it doesn't come back it's not the end of the world."