Kensington and Chelsea Council is planning to increase its voluntary sector budget by 12 per cent in 2013/14.
Plans drawn up by the Conservative-controlled authority say that it will increase its grant funding for the voluntary sector from £2.08m in 2012/13 to £2.33m next year.
The 2013/14 budget includes an additional £348,000 from a new innovative projects programme divided between seven groups, which are tasked with delivering new services in the borough that tackle social issues.
The programme will run from 2013 to 2016 and has been allocated a total of £739,000 over that period, which could rise to £1.5m.
The council said it was increasing its voluntary sector budget despite an overall reduction in its funding settlement from central government. It said the proposed increase was a sign of its commitment "to ensuring the long-term future of the third sector".
But the plans include cuts to existing grants to charities totalling £99,000 on 2012/13 figures. Only £1.98m will be made available to charities in the conventional grants scheme in 2013/14, compared with £2.08m in 2012/13.
Kensington and Chelsea Citizens Advice Bureau faces a 6 per cent cut in its funding, from £724,700 in 2012/13 to £683,500 in 2013/14.
A council paper explaining the changes said they were "based on a relatively modest switch in funding from existing activity towards innovative projects".
Mary Gardiner, chief executive of Kensington and Chelsea Social Council, which supports voluntary organisations in the borough, welcomed the innovation programme but said other charities were being "punished" by funding cuts to pay for it.
"We’re very pleased about the innovation grants, but at the same time the council is hitting other charities hard by reducing the corporate grants by £99,000," she said.
"The CAB is losing £40,000 – that amounts to one adviser’s post. The cap on benefits is causing massive problems with debt and housing issues in the borough, and advice agencies are being overwhelmed by requests. We’re not sure enough thought has gone into how the changes will affect charities on the ground."
Gardiner said the council’s shift towards supporting innovative projects failed to recognise the important role of long-standing charities in the borough.
Rock Feilding-Mellen, Kensington and Chelsea Council’s cabinet member for civil society, is considering whether to approve the proposals and will make a decision later this month.