The Mental Health Foundation is proposing to cut 10 staff because government contracts are not keeping up with costs.
About half of the charity's income is from government contracts for providing health promotion resources, campaigns and programmes.
Mental Health Foundation chief executive Shaun Robinson said it has not had any government funding cut, but government-funded contracts have not kept pace with rising costs over a number of years.
The foundation was facing a decrease in fundraising revenue owing to record inflation and a recession, he said.
"As an organisation, we need to adapt to these challenges and change the way we are organised to ensure our important mahi continues to enable all New Zealanders to enjoy positive mental health and wellbeing.
"Staff are currently being consulted, therefore during this time we will not be discussing any specifics."
The foundation employs 56 people - some were part-time or on contract.
In a statement, Health New Zealand/Te Whatu Ora acknowledged annual contract increases in recent years have struggled to keep pace with rising costs across a range of primary and community providers.
It said it worked hard to ensure the available funding was targeted at meeting cost pressures faced by a range of providers, of which the Mental Health Foundation was one.
Rising costs were impacting all organisations, and the Mental Health Foundation, along with others, were required to manage and make priority decisions based on the funding available, it said.
Health NZ was working closely with the foundation to mutually agree the priority programmes to be delivered within its current funding.
It said it had a national contract review process for annual increases with primary and community health services.
