A report to be launched today by independent think-tank Demos reveals that some groups fear that they are being used as arms of the Government.
Community groups provide a vital link with socially excluded communities because of the trust that they have developed. However, that independence and trust is being put at risk by the formal partnerships with government bodies that groups are being forced into.
Helen McCarthy, author of Inside Out: Rethinking Inclusive Communities, said: "Local groups don't speak the same language as the official bodies they are asked to work with. It's the fact that they are people-based rather than paper-based organisations which enables them to reach out to the community."
Birmingham-based group Women Acting In Today's Society was studied for the report. Anita Guy, trustee of the charity, said: "The Government is very output based - it wants to know exactly what it will get for its money.
"It would benefit everyone if it was more hands-off and trusted charities. If the Government set several broad aims rather than demanding to know how every last penny of a grant will be spent, community groups would be more flexible."
A spokesperson for Demos said: "We are not suggesting that larger government bodies and grassroots groups are diametrically opposed, but there is a mismatch.
"The Government talks of providing a service, while community groups talk of empowering people. Government bodies have complex accountability structures, and rightly so, while community organisations are accountable to the community they work in."