Community grants – which provide vital sources of funding to many charities in Northampton – could either be scrapped or reduced by half as part of the borough council's budget proposals.
This would save the authority either £275,000 or £550,000 a year, but voluntary workers believe it would end up costing the town much more in the long run.
Sandra Bell, director of Ability Northants, which runs the Shopmobility scheme, which hires out wheelchairs and mobility scooters, said: "Even if they only stop half our funding, there is no way we would be able to run the service. Any cuts and that would be it for us.
"Hundreds of people use the service, including people visiting the town. If we had to shut they would not be able to do their shopping the town centre, and that would have a huge knock-on effect on retailers.
"The council might as well put up a sign saying: 'Northampton is closed'. These proposals are absolutely horrific."
Shopmobility, which costs £30,000 a year to run, receives £21,000 of that from the borough council.
This money goes towards servicing equipment, insurance and paid staff who work alongside volunteers.
Other charities and voluntary organisations which face possible funding cutbacks, include groups which tackle anti-social behaviour, provide counselling services and advice, help victims of crime or run community activities.
Vulnerable people, including the elderly, disabled, homeless and victims of domestic violence could lose services they rely on.
One woman, who works in the voluntary sector but did not want to be named, said: "The cuts might save the council £550,000 but they will cost the town millions and millions of pounds.
"The cuts will have consequences and knock-on effects in a variety ways.
"The town will lose out. Many of the services will end up having to be provided in different ways, which will cost more."
alison.curtis@northantsnews.co.uk