The volunteering charity TimeBank will make about a third of its staff redundant after missing out on central government funding.
The charity announced it will shed 11 of its 34 employees as a result of its application for £500,000 of funding from the Cabinet Office's strategic partners programme being rejected.
It received £525,300 from the programme in 2010/11.
The reduction in funding means the organisation will also scale back its services, including its work in helping volunteers find suitable volunteering opportunities. It will also cut its communications team from seven to one.
TimeBank will continue with programmes supported by other sources of funding, such as a scheme that encourages young people to help older people get online and a project helping ex-servicemen adjust to civilian life.
The redundancy process will be completed by the end of August, a spokeswoman for the organisation said.
Paul Jackson, chair of TimeBank, said the decision not to renew its funding "flies in the face" of the government's commitment to the big society agenda.
"They want more people to be encouraged to take an active role in their communities and get involved in social action," he said.
"Well, we have been doing just that for the past 10 years. In fact, we've helped hundreds of people to get online through our volunteering projects, which directly complement the government's Digital Champions scheme.
"Sadly, our contribution to continuing this important work has been severely compromised by having to reduce our workforce."