The reduction brings the budget down from £147.9m to £136.9m, a drop of 7.4 per cent.
In a statement released today, the OCS confirmed it will cut £5m from v’s match funding budget and £1.95m from its annual grant, which had been set at £39m for the current financial year.
The OCS will also cut its funding to Capacitybuilder by £1.3m and to the Commission for the Compact by £400,000.
It will also save £130,000 by ceasing its payments to the Regional Development Agencies, which are being axed. The money was used to provide business support for social enterprises.
The OCS has identified a further £2m of savings from "unallocated funding".
In a statement, Terry Ryall, chief executive of v, said: "It is regrettable that the Office for Civil Society has cut our funding for this year, but of course we understand these savings are part of the government’s wider spending cuts.
"We are considering how we can make the 5 per cent saving required without impacting on front-line services or jobs." The statement said v would be able to meet all of its existing match fund commitments with private sector firms.
A Capacitybuilders spokeswoman said the cuts would have immediate effect and the organisation would not make any new awards under its Regional Networks Fund or its Social Enterprise Support programme.
Committed grants would continue to be paid, she said. Capacitybuilders had been in talks with government officials about cutting its budget since April, she said.
The Commission for the Compact will make the £400,000 savings, which amount to a 20 per cent cut in its budget this year, by reducing spending on marketing and events, which will mean less promotion of the Compact at national and local levels.
Richard Corden, chief executive of the Commission for the Compact, said: "Anyone in my position who didn’t see this coming and didn’t have discussions about it months ago would be an idiot." He said no one at v had contacted him with concerns about whether the cuts were Compact-compliant.
A spokesman for the OCS said there was "absolutely no question" of a breach of the Compact because the department had been in regular discussions with affected organisations about the cuts.
Francis Maude, the Minister for the Cabinet Office, and Nick Hurd, the Minister for Civil Society, have written an open letter to the sector asking charities, social enterprises and community groups to offer ideas for how the OCS could make further economies. In the letter, they ask voluntary sector groups to email cost-cutting ideas to email@example.com.