The south London local authority is proposing to cut grants to local voluntary organisations from £1.8m a year to £625,000 a year over the next four years, a drop of almost 66 per cent.
The plans will be discussed at a council cabinet meeting on 12 July. If they are approved, many organisations that rely on local authority grants will struggle to survive, council papers indicate.
The council received 167 applications from 126 different organisations for money from its Stronger Communities fund. Under the proposals, only six will receive grants totalling £625,000 a year between October and September 2014.
Steve Phaure, chief executive of Croydon Voluntary Action, which has been allocated £180,000 a year under the proposals, argues that the 66 per cent reduction is a "disproportionate blow for Croydon’s voluntary sector" given the 25 per cent overall cuts local authorities have been tasked with delivering after last month’s emergency Budget.
"The organisations being cut are working with some of the most disadvantaged people in Croydon," he said.
"CVA is asking Croydon Council to hold off from making these cuts to give us the opportunity to work with our members, because there is scope for closer collaboration and possible mergers that can take place if we are given the time."
Vidhi Mohan, Croydon’s cabinet member for stronger communities, said: "With the current funding climate, the priority is now to fund those enabling organisations that have a broad reach across the area and commission services from others as we need them, which is far more efficient.
"However, we accept that many groups that have previously been well funded might now have difficult decisions to make.
"We will actually be looking to commission more front-line services from the voluntary sector in future, not fewer. But we will do that in a different way."
Two charities in Northamptonshire are facing closure after making failed bids to provide services totalling more than £1.1m for disabled people. Disabled People's Alliance Northamptonshire will close next month after it missed out on a renewed contract to provide disabled people’s services.
Parents in Partnership, which supports families of children with learning disabilities, is considering its future after it missed out on a £600,000 advocacy service contract. The contract went to Advocacy Partners Speaking Up.
Northamptonshire County Council said it had followed a formal tendering process and that negotiations were under way to ensure local staff were transferred to the new advocacy service.