The organisation, which supports unpaid caregivers, will lose its $42,000 ministry contract, community worker Anneloes de Groot said.
The organisation had been told funding would cease next March. The group raises about $60,000 a year itself, and this will need to increase.
The group has a carers' lounge in Dunedin Community House, and gives information and help to carers throughout the the province, Ms de Groot said.
It also operates a free wheelchair loan service, and publishes a newsletter.
A lot of carers in the province were isolated and it was an important service for them.
She feared the ministry's replacement programme would be predominantly online, which was not a substitute for human interaction.
The organisation had two part-time staff, who were determined to increase fundraising to replace the cut public funds.
Ministry of Health National Health Board disability support services group manager Toni Atkinson said in a statement the ministry had advised all ''relevant carer services'' that their contracts would not be renewed.
The ministry was replacing the contracts with national services, including something called ''carer matching''.
The ministry would call for tenders for the service soon.
The ministry referred the ODT to the Carers' Strategy Action Plan 2014-2018, which says the carer matching service will involve a database of information to help carers choose a respite service.
''Initiatives in the plan include purchasing new national carer matching services and carer wellbeing and learning resources that are designed to meet the current needs of disability sector carers, family and whanau.
''The budget and associated contracts to support carers have been in place since 1999. However, the disability sector has undergone significant changes in the last 15 years.
''The Ministry of Health is committed to giving people with disabilities and their families more choice, control and flexibility about the disability support services they access, and to improving the access to and the quality of the support available for carers,'' Ms Atkinson said.
