Volunteering charity CSV said the office had neglected the plight of charities, including itself, the Prince's Trust and youth charity Fairbridge, that deliver national projects supporting the socially disadvantaged. Many bodies now face project closures and redundancies because a £20m funding pool for such projects has been lost.
National funding has been scrapped by the Department for Work and Pensions - which is responsible for deciding how European Structural Funds will be spent between 2007 and 2013 - in favour of processing all European money regionally through statutory bodies such as Jobcentre Plus (Third Sector, 8 November).
The department claimed regional distribution would make the most of the funds, which have been approximately halved because the European Union has grown.
But CSV said some projects that can be run only on a national scale would not be able to access money regionally. It expressed dismay that the office had failed to take up the cause.
"One of the things that preoccupies me is the fact that the Office of the Third Sector has not been able to champion the needs of the sector in the light of this massive reduction in funding," said Tamara Flanagan, director of European funding at CSV. "On the one hand you have the new office and its vision for the sector - that it will fulfil lots of roles and become more sustainable. On the other, you have an outflow of traditional resources that it seems not to be getting involved with."
Flanagan said that all efforts to get the DWP to consider reinstating even a smaller fund for national projects had failed. "It's like the pink elephant in the room," she said. "Nobody wants to talk about it."
Flanagan warned that the sector could go into meltdown over the next nine months as money from the 2000 to 2006 round of European Structural Funds dries up. "People are beginning to realise that this European thing isn't going to be there for them at the end of the year," she added.
A Cabinet Office spokesman said: "We have worked with the Department for Work and Pensions to ensure that the potential of the third sector is recognised in delivering the European Structural Fund.
"The voluntary sector's concerns have been considered in the public consultation on the new programme. The resulting proposals reflect a number of issues raised by the sector, including a greater focus on disadvantage and retaining a small grants element of the programme."
- See Feature, page 18.