A primary care trust that wants 18 voluntary organisations to return grants worth £150,000 has rejected a compromise offer.
NHS North Yorkshire and York wrote to the organisations on 19 October asking them to return funding already awarded this financial year to help reduce a £17.9m budget over-spend. It wants them to pay back funding for the period of 19 November to 31 March.
York Council for Voluntary Service and North Yorkshire Forum for Voluntary Organisations, which are coordinating the sector's response, offered to return about half the sum demanded, but the PCT board rejected this last week.
Angela Harrison, chief executive of York CVS, said returning the full sum, with only one month's notice, would have been "too big a gap to fill". She said: "We believe that most organisations, when invoiced by the PCT to return funds, will return the invoices as 'under dispute', so the PCT will then have to decide how to proceed and whether to take legal proceedings to recover funds from local charities."
A spokesman for the PCT said: "The PCT will continue to request the return of the money, which should be unspent."
In a statement, Sue Metcalfe, deputy chief executive of the PCT, said it would not change its position on funding, but would write to organisations in the next week "setting out proposals that we hope will represent a fair solution for all parties".
She said the PCT was a signatory to the Compact, which sets out strict rules for public funding of the voluntary sector, but "as we look to protect our NHS services, no area can been immune to scrutiny".