The foundation was relaunched two years ago and offered financial support to the 18 regional air ambulance organisations across England and Wales.
The decision to cease operations comes after applications for core costs were turned down by the Department of Health, the Community Fund and other trusts. It is also the result of the almost blanket refusal by the regional air ambulance services to loan back money distributed to them by the foundation last December.
A £10m fundraising appeal to high-level donors last September raised just £445,000. The foundation's five staff were given three months' notice of redundancy at the end of January.
Nigel Dumbrell, corporate development manager at the foundation, said two approaches to the Community Fund last year had encountered the "criteria trap". He said that Richard Gutch, former director of the Community Fund England, told the foundation that the universal nature of its service meant that it didn't fit any of the fund's criteria.
The foundation sought match-funding of around £500,000 to maintain its two-year running costs, but was offered nothing.
"We thought the Department of Health and the Community Fund were two areas that fitted hand in glove," said Dumbrell. "Now we feel the Government has backed away from its responsibilities."
The National Association of Air Ambulance Services, as the foundation was known from 1999-2002, was launched with a £14m grant from the Automobile Association and established six regional air ambulance services.
Dumbrell blamed the charity's demise on a decision made by Jon Scourse, the foundation's executive director until the end of last year. He said Scourse caused a cash-flow crisis by advising trustees to share £285,000 among 16 regional air ambulance charities last December. But the foundation realised the money had been needed to cover core costs after money from potential grants failed to turn up.
Dumbrell said Scourse, who left the foundation at the end of last year, had been "naive" in not checking research conducted by the charity, which shows that nine out of 10 people believe air ambulance services should be funded by the Government.
However, Scourse said the money awarded was committed to the regions and couldn't have been stopped. "Only the Lincolnshire and Nottinghamshire Air Ambulance offered to loan back the £20,000 we gave them to help us through our short-term cash crisis," said Dumbrell. "The rest just took the money and ran."