Grant-making charities will face increased costs and administration because of the decision by the Payments Council to phase out cheques by the end of 2018, according to an organisation that gives money to people suffering hardship.
The RL Glasspool Charity Trust made about 3,300 small grants totalling £860,000 last year, of which more than half were payments by cheque.
The charity has written to the Payments Council pointing out there are 2,200 similar trusts making payments worth £300m a year to individuals. " Clearly the withdrawal of cheques may well cause charities like ourselves some considerable difficulties" the letter says.
It adds that the charity's trustees "are not happy about the possible weakening of our financial controls and procedures resulting from using two passwords on a computer rather than two signatures on a cheque."
Frances Moore, chief executive of the charity, told Third Sector that no practical payment method existed to replace cheques.
She said that making payments through other methods, such as the electronic payment system Bacs, would require the charity to collect more data and increase its paperwork. This would also increase its fees to the bank and cut the level of grants it could make.
"Writing cheques is fundamental to our charitable work and we cannot currently see any acceptable alternative," she said.
A spokeswoman for the Payments Council said: "Now the decision has been taken to phase out cheques, we're carrying out research to ensure that we're aware of the potential problems that will be caused.
"We will be looking at cases such as this, and making sure there are alternatives in place before 2018."