Terminal illness charity Saint Michael's Hospice has missed out their £35,000 funding request in Harrogate Borough Council's strategic annual grants.
The council's Voluntary and Community Sector (VCS) panel has published their initial report into handing out more than £170,000 to local charity and community organisations.
A total of £174,500 has been handed out by the VCS to eight organisations including £22,500 to Harrogate Homeless Project and £40,000 to Harrogate & Ripon CVS.
However, despite applying for £35,000, St Michael's Hospice has been overlooked entirely for funding which would have been in place for the next three years.
The report argued that, with the council oversubscribed for funding applications, the organisation's 'large reserves' had to be taken into consideration.
Leader of Harrogate Borough Council, Coun Richard Cooper, explained that smaller organisations 'living hand to mouth' had to be prioritised for the grants with only finite funds available.
He said: "But there are many organisations that can't do this and it's a bit more hand to mouth and they need that extra support to grow their organisation to get to that stage.
"We have done very well to preserve the funding available. I would love to be able to give grants to everybody but invariably there's always a finite amount of money and decisions have to be made.
"You have to assess who needs the money the most. We want to support these organisations and we have managed to preserve the vast majority of the funding to them."
Chief Executive of Saint Michael’s, Tony Collins, said: ‘Although disappointed, we fully respect the demand on funds, and understand that such decisions need to be made.
‘Saint Michael’s is shaped by the community we serve, and it is our duty to ensure the organisation is well-governed and that care is safeguarded in the event of future risks or challenges.
‘As such, our available reserves equate to three months running costs; given the nature of the care we provide, the enormous demand for our services and the fact that we rely on almost 80% voluntary income, we consider this the minimum for effective and responsible delivery of our services across the district.
‘We would also like to take this opportunity to acknowledge the important support we receive from Harrogate Borough Council through the provision of charity rate relief, and recognise that all organisations granted funding – both smaller, local charities and those with a national profile, provide valuable services.
‘As Harrogate’s local hospice care charity, the community support Saint Michael’s receives through donations, fundraising and grants is absolutely vital in ensuring we can provide the care local families need, want and deserve – both today, tomorrow and in years to come.’
The report said the VCS allocated grants based on the organisations' ability to make a district wide contribution and 'influence policy design, development and delivery of services'.
As well as St Michael's Hospice Ripon City Festival Trust and Northallerton & District Voluntary Service Association also missed out completely on their funding application.
Services such as Relate mid-Yorkshire and Orb Community Enterprise received their full amount of funding that they applied for but others missed out on the full amount they requested.
Age UK North Yorkshire missed out on more than 60 per cent of their requested funding and Craven and Harrogate District Citizens Advice Bureau (CAB) received £55,000 less than their applied for amount.
While Age UK North Yorkshire has not received funding from the council before the CAB has received around £114,000 consistently over a number of years.
The organisation were recently notified that their funding term was coming to an end and Coun Cooper said that all organisations should not be reliant on council funding for survival.
He said: "Community grants are things that the council doesn't have to do, but if we stop giving grants then we could save more than £170,000 a year and that's about 5.5 per cent of the council tax.
"But these groups are the glue that binds communities together. It's great to see the charities grow with the money we give them but they should never be solely relying on it.
"There could be other organisations that come forward next year which means the money will have to go to them instead. No organisation should assume they are getting the grants but we have done very well to preserve the funding available."