Only one in four applications that meet the specifications are receiving grants.
Nigel Bacon, chief executive of Warrington CVS, said fundraisers often felt they had submitted strong applications only to have them turned down on grounds they considered their applications met.
Kevin Curley, chief executive of umbrella body Navca, said: "If one in four is getting funded, 75 per cent of the effort that's going into proposals is being wasted.
"We had expected the Big Lottery Fund to announce a programme of £200m to £300m initially. There needs to be an indication that local groups are being listened to at a time when funding is being cut."
A spokeswoman for the fund said: "Reaching Communities is an attractive programme. More competitive, demand-led, lightly prescribed programmes are always likely to be oversubscribed."
Consultants are to conduct a four-year evaluation of the programme, but the issue of over-subscription is not part of their remit.