The Stafford St centre, in Dunedin, provides life and employment skills for those with mental illness and mild intellectual disabilities.
Deputy chairman Graham Hambleton said the two main funders, the Otago District Health Board and Ministry of Social Development, were both pulling out at the end of June.
The health board contributed about $145,000 and Government about $90,000, comprising about 85% of the centre's funding.
Mr Hambleton said the centre was advised early this year the Ministry would not roll over its fundingAsco hoped to continue with a pruned-down service, but about three weeks ago the health board advised it was pulling out, too.
Mr Hambleton said society's vulnerable members needed protection, even in leaner financial times.
"When the going gets tough the first people we target are the most vulnerable."
In the greater scheme of things, the funding was a "small amount of money".
Mr Hambleton said Asco was in talks with a not-for-profit community provider, which he declined to name, to keep the centre open.
Manager Bruce McCormick said the service differed from others as people could self-refer; it catered for those who did not fit into a distinct category.
Because of the rigid division between mental health and intellectual disability funding, some people fell through the cracks, he said.
The centre had 180 members on its books, of whom 50 to 60 attended Monday to Friday, between 9.30am and 2.30pm. It had 4.2 full-time-equivalent staff.
Members received a cooked lunch, and took part in activities such as gardening, cooking, self-esteem building, computer skills and communication skills.
The centre played an advocacy role, ensuring members were accessing their state entitle-ments, helping with housing, benefits and health needs.
Member services team leader Raewyn Paris said some of those at the centre had endured abuse and inappropriate treatments in mental institutions before community mental health care.
After living through some of the worst experiences people could, they faced abandonment in a "scary" world if the centre closed. She feared some would end up on the street during the day.
Otago and Southland District Health Boards' planning and funding regional manager, David Chrisp, said the DHB had to prioritise funding to the greatest need.
By email, Mr Chrisp said members could access other services still funded by the DHB.
"For at least some of the services we contract Asco for, other alternatives exist for clients."
The loss of Ministry funding played a part in the decision, he said.
Member Les Walker said that for some, lunch at the centre was the only decent meal they got to eat all day.
He valued the close friendships that formed at the centre. He had little doubt some members would resort to crime if it closed.
"You'll see more people in jail."
Otago Mental Health Support Trust spokesman Mike McAlevey called on the health board to reverse the decision, calling it an attack on society's vulnerable.
