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London Councils which represents the capital's 33 boroughs will soon be consulting on further cuts to its grants scheme.
It is proposing cutting its budget to £10m for 2012/13 and then to £8m a year from 2013/14 onwards. It's budget for 2011/12 is £20.77m down from £26 in 2010/11.
It's original plans to introduce bigger cuts for the current year were challenged in a judicial review which forced it to rerun it's consultation.
A decision on the exact budget for the next financial year will be made in January 2012.
The Voluntary Sector Forum, a network for voluntary organisations funded by London Councils, said it was unhappy that the budget was being reduced, but pleased that the council planned to continue the grants programme.