The feel-good sentiment during Singapore's Golden Jubilee year helped propel charitable giving here to a 17-year peak last year.

Singaporeans dug into their pockets and gave $1.4 billion in tax-deductible donations. This is up 24.6 per cent from 2014.

But the one-off circumstances, coupled with a gloomy economic outlook, means that the rise in donations is unlikely to be sustained.

"I think donations will drop in 2016," said social service veteran Gerard Ee, chairman of the Charity Council, which advises the Commissioner of Charities.

"The state of the economy is also quite bad this year."

It will be quite a turnabout from the situation last year, when individuals and companies - which contribute two-thirds of the donations - gave generously.

A combination of factors contributed to the spirit of largesse - besides the ebullient mood during Singapore's 50th birthday celebrations, the Government also offered a one-off enhanced tax incentive for those who donated. Another reason was Care and Share, a government grant that matched donations from December 2013 to March this year.

Commissioner of Charities (COC) Low Puk Yeong, in the annual report released by his office yesterday, attributed the rise in donations to the hike in tax deduction to 300 per cent, to encourage charitable giving in celebration of SG50.

This meant that for every dollar donated, $3 was deducted from the donor's taxable income for the year. Currently, $2.50 is deducted. Only charities that are institutions of a public character can collect tax-exempt donations.

Mr Ee cited the "celebratory mood" of SG50. "Everybody wanted to give back and help the needy."

Those in social and welfare sectors were the biggest beneficiaries, garnering a third of the donations, followed by education and health.

But the arts and heritage sector was also gaining in popularity, receiving nearly thrice what it did in 2014. This was due to the raising of the lifetime funding cap per organisation under the Cultural Matching Fund from $10 million to $15 million last September, said Mr Low.

Among those which benefited was 50 for Fifty, which got young people to raise $325,000 for about 20 charities during an eight-month drive that started last July.

Its co-founder Cheryl Chong surmised that Care and Share helped stir public interest, saying: "People were more keen to give as the donation impact could be doubled."

But the going ahead could be tough. "So, we are trying to get companies to volunteer their services too," she said.

The charity sector faces other challenges. Charities abroad have been increasingly used to support terrorism, and the COC report highlighted the need for local charities to be aware that they could be used for money laundering and terrorist financing.

A COC office spokesman did not say if charities here have been misused in such a manner thus far, but added that some can be attractive targets for money launderers and terrorist organisations. He said: "(We) take a very serious view of any charity being involved in terrorism-related activities and will thoroughly investigate any such case."

It is also reviewing the Charities Act and plans to seek feedback from the public on proposed amendments by the year end.

Winners of awards to recognise charities with high standards of governance and disclosure practices will also be announced next month.