Liverpool City Council has approved a £1m cut to its grants to community organisations – a 50 per cent reduction.
Councillors last night voted to reduce expenditure by its Community Resource Unit, which funds projects across the city, from £2m to £1m over the next financial year.
The cut will affect 58 community organisations in the area.
Kristian Khan, manager of the Liverpool Central Citizens Advice Bureau, said his organisation would lose £65,000 in funding because of the cut, and one member of staff had taken voluntary redundancy as a result.
He said the cut would also cause the CAB to reduce spending and let out part of its building to help generate new revenue.
"Local authority funding used to represent about 27 per cent of our income; now it’s down to about 12 per cent," said Khan. "It has been tough, but the council has been supportive and offered site visits and programmes for capacity building. They haven’t just done this and left us to it."
Tony Okotie, chief executive of Liverpool Charity and Voluntary Services, which will be affected by the cut, said its affect on the local voluntary sector would be mixed.
"There are some small charities for which CRU funding represents a big chunk of their income and where it will have a huge impact," he said. "There are others where the funding is a much smaller percentage of their income."
Okotie said he was aware of about three organisations that were at risk of closure, but said the CVS was trying to assess the potential impact of the cut and offer support.
But he said research carried out by his organisation suggested that the Liverpool voluntary sector had a combined income of more than £350m a year and was doing well overall.
A spokesman for Liverpool City Council said: "Central government has cut our budget by 58 per cent, and this is having an impact on all the services and organisations we support. We have been working with these organisations to give them time to prepare and are doing what we can to mitigate the impact by giving them more of the money up front at the start of the financial year. We will continue to offer any support and assistance we can to find other sources of funding."